ENYSE Arca, the company that provides the trading infrastructure powering a considerable portion of Wall Street, has partnered with Bitwise Asset Management to develop an exchange-traded fund focused on Bitcoin. The Bitwise Bitcoin ETF Trust is one of various cryptocurrency trading securities pending approval by the United States Securities and Exchange Commission, but the strategic backing of NYSE Arca is being welcomed by analysts because of the company’s standing as well as a recent proposal file for the purpose of easing regulatory approval.
Even though the SEC has not approved any cryptocurrency ETF filing, Bitwise and NYSE Arca believe that the way their investment product is structured will make a difference. The Bitwise ETF will assign a third-party custodian to hold Bitcoin tokens, and pricing data will come from various digital currency exchanges as well as Bitcoin futures. Price manipulation has been a major concern for SEC regulators reviewing cryptocurrency ETF filings; according to NYSE Arca, collecting price data from numerous exchanges and futures contracts will protect investors by reducing the potential of pricing fraud.
The Evolving Nature of Bitcoin Investment
ETFs function in a manner similar to equity securities in the sense that they can be bought and sold just like stocks. An ETF can track a benchmark index, baskets of stocks or industrial sectors; in the case of the Bitwise ETF, it is designed to track Bitcoin plus major hard forks such as Bitcoin Gold and Bitcoin Cash. If the Bitwise ETF is approved, it would trade on a section of the New York Stock Exchange that lists smaller stocks and options. Bitwise directors believe that their filing will be approved and start trading this year.
Another financial giant working on a Bitcoin ETF is the Chicago Board Options Exchange, a company that has previously obtained regulatory approval for Bitcoin futures contracts. Similar to NYSE Arca, CBOE has forged a strategic partnership with Van Eck, a renowned mutual fund management firm, for the purpose of adding prestige to its ETF filing. In late January, CBOE filed a rule change with the SEC to address certain regulatory concerns.