Bitwise Withdraws Bitcoin ETF Proposal from SEC Registration

SEC has rejected all bitcoin ETF proposals, citing market manipulation and fraudulent activity concerns.

Crypto asset manager Bitwise has filed to withdraw a proposal to the Securities and Exchange Commission (SEC) to list a physically-backed Bitcoin investment vehicle on NYSE Arca.

A proposed rule change would have allowed Bitwise to list and trade Bitwise Bitcoin ETF Trust, which would be based on an index that draws data from large crypto exchanges.

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Per an official document published today by the SEC, Bitwise Bitcoin ETF Trust requests the withdrawal of its registration statement on Form S-1, which was initially filed with the commission on January 10, 2019.

“At this time, the Registrant has determined not to pursue the registration and sale of the securities covered by the Registration Statement. The Registrant believes that this withdrawal request is consistent with the public interest and protection of investors as required by Rule 477(a) of the Act and represents, in accordance with Rule 477(c) of the Act, that there has been no issuance, distribution or sale of the securities under the Registration Statement,” the SEC filing further states.

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The company filed with the US top watchdog for a regulated ETF that would track its Bitwise Bitcoin Total Return Index. At the time, Bitwise explained that the index aims to capture the total returns available to investors in the world’s largest crypto asset, including “any meaningful hard forks.”

Bitwise says its proposed ETF differs from previously-filed similar proposals in that it will safeguard holdings in 100% cold storage with an institutional, regulated third-party custodian and as the index draws prices from a large number of cryptocurrency exchanges.

Overturning the rejection didn’t work

If approved, NYSE Arca, the exchange owned and operated by the ‎Intercontinental Exchange (ICE)‎‏,‏ was planned to host the proposed listing while Bitwise Index Services would produce and manage the bitcoin ETF.

Bitwise was the second to apply for a physically-backed exchange-traded product. The first was blockchain technology company SolidX, which filed with the SEC in collaboration with money management firm VanEck.

After the SEC’s initial rejection of its ETF proposal in October 2019, Bitwise has tried to address the agency’s concerns of market manipulation, which was cited as one of the reasons the regulator had rejected its bitcoin exchange-traded fund. Although the SEC said in November that it is taking a second look at the rejection, Bitwise’s suggestions have seemingly failed to satisfy the regulator’s demands.

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