The SEC Has Rejected Every Bitcoin ETF. This Firm Thinks It Has a Solution

One company thinks it knows how to get a bitcoin exchange-traded fund approved by U.S. regulators.

Wilshire Phoenix, a relatively young financial firm in New York, filed to launch the United States Bitcoin & Treasury Investment Trust ETF in May with NYSE Arca.

At that point, a dozen bitcoin ETF proposals had already been swatted down by the U.S. Securities and Exchange Commission - including nine in one day.

Unlike other ETF applications, Wilshire Phoenix's ETF will invest in both bitcoin and U.S. Treasury securities, commonly referred to as T-bills.

The SEC has long been hesitant to approve an ETF with exposure to digital assets, citing the market's relatively young age and the possible risks to investors.

Herrmann says the Wilshire ETF has several mechanisms to address these concerns.

The CME's Bitcoin Reference Rate will provide the data for bitcoin's price in the Trust, rather than use an in-house price method "Or one from any related party," he added.

Wilshire Phoenix is also hoping to address SEC concerns about market manipulation by using a surveillance sharing agreement, one component the regulator stressed was needed when rejecting a recent bitcoin ETF application.

"The CME has surveillance sharing agreements with both the CME futures market as well as the relevant portion of the spot market that forms the basis for the Trust's bitcoin values. This addresses the SEC concerns about the lack of surveillance sharing agreements with the relevant spot market, which is something previous applicants have not been able to address."

Herrmann is optimistic about the ETF proposal's chances, saying "We developed the ETF consistent with investor protection as well as fair, orderly and efficient markets."