In a race to gain approval for a Bitcoin exchange-traded fund (ETF), asset management firms WisdomTree and BlackRock have submitted filings to the U.S. Securities and Exchange Commission (SEC). WisdomTree’s latest filing comes just days after BlackRock’s application, as both companies seek to tap into the growing demand for cryptocurrency investments.
WisdomTree’s proposed investment vehicle, called WisdomTree Bitcoin Trust, aims to be listed on the Cboe BZX exchange under the ticker symbol BTCW, according to the filing submitted on June 20. The ETF would provide institutional investors with exposure to the value of Bitcoin without the need to directly invest in the cryptocurrency itself. WisdomTree had previously submitted a similar ETF application in 2021, with Cboe BZX filing a proposed rule change in support of WisdomTree in January 2022.
However, the SEC rejected the rule change in October 2022, citing concerns over inadequate surveillance-sharing agreements and insufficient protections against market manipulation. Now, with the new filing, WisdomTree is making another attempt to address these concerns and gain approval for its Bitcoin ETF.
The proposed WisdomTree Bitcoin Trust is designed as an exchange-traded fund that issues common shares of beneficial interest (Shares) and will be traded on the Cboe BZX Exchange. The trust’s investment objective is to track the price of Bitcoin, while its Shares will be valued daily based on the CF Bitcoin US Settlement Price, an independently calculated value derived from major Bitcoin spot exchanges.
Notably, the Trust does not currently plan to buy or sell Bitcoin directly, except for the sale of Bitcoin to cover specific expenses. Instead, it will conduct “in-kind” transactions, where financial firms authorized to purchase or redeem Shares (known as Authorized Participants) will deliver Bitcoin to the Trust’s account in exchange for Shares. Similarly, when redeeming Shares, Authorized Participants will receive Bitcoin from the Trust.
To enhance investor protection, WisdomTree voluntarily complies with certain requirements of the Investment Company Act of 1940. This includes custodying the Trust’s assets at a bank meeting the Act’s requirements, providing daily disclosures on the Trust’s website, audited financial statements, compliance with transaction restrictions involving affiliated persons, maintaining a fidelity bond, and adhering to financial record keeping and reporting requirements.
By incorporating these measures, WisdomTree aims to provide investors with some of the significant safeguards offered by the Investment Company Act. It also plans to use an independent pricing source, the Reference Rate, to value its Bitcoin assets. The Sponsor of the Trust will facilitate compliance with the financial record keeping and reporting requirements mandated by the Sarbanes-Oxley Act of 2002.
Investors interested in the Trust can place trade orders through their brokers, subject to customary brokerage commissions and charges. It’s important to note that buying or selling Shares during the day may result in a premium or discount relative to the Trust’s net asset value, and investing in the Trust carries risks similar to those associated with investing directly in Bitcoin.
The offering of the Trust’s Shares is registered with the SEC under the Securities Act of 1933 and is expected to be a continuous offering. The Trust qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act, allowing it to comply with reduced reporting requirements.
With WisdomTree and BlackRock both seeking approval for Bitcoin ETFs, the SEC will carefully evaluate their filings, considering factors such as market surveillance agreements, protections against market manipulation, and overall investor protection. The decision will have significant implications for the cryptocurrency industry, potentially opening the door for greater institutional participation and adoption of digital assets in traditional financial markets.
Source: https://azcoinnews.com/wisdomtree-files-new-application-for-bitcoin-etf-as-sec-evaluates-crypto-market.html