In a January 14, 2020 filing with the U.S. Securities and Exchange Commission (SEC), Bitwise Asset Management requested the withdrawal of its application for a cryptocurrency-linked exchange traded fund (ETF). This came after the SEC had rejected Bitwise’s proposal in October 2019. On February 26, 2020, the SEC issued an Order that rejected the request by Wilshire Phoenix for a Bitcoin-based ETF.
The SEC’s reasoning was similar to what it had said in 2019 with respect to Bitwise and in 2018 with respect to rejecting a similar request for the listing of the Winklevoss Bitcoin Trust. Namely, Wilshire Phoenix was unable to persuade the Commission that the Bitcoin market is sufficiently resistant to market manipulation.
There was another common element to the Winklevoss situation in the form of a dissent from Hester Pierce, affectionately known as “Crypto Mom.” Apparently questioning whether the SEC will ever change its thinking about cryptocurrency, she wrote as follows:
This order is the latest in a long string of disapproval orders that the Commission has issued regarding bitcoin-related products. This line of disapprovals leads me to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products—and only to bitcoin-related products. Footnote 2 of the dissent identified the other examples of the SEC’s rejection of Bitcoin-related products.