The SEC is revisiting its rejection last month of the proposal from Bitwise Asset Management for a Bitcoin ETF.

In a document published on November 18, 2019, the United States SEC said it would review the ETF application filed by Bitwise Asset Management and NYSE Arca.

In October the SEC had rejected the proposal from Bitwise on the following ground:

“The Commission is disapproving this proposed rule change because, as discussed below, NYSE Arca has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices.’”

At the time, Bitwise merely welcomed the detailed feedback and additional clarity following the SEC’s rejection.

SEC action suo moto?

Matt Hougan, head of global research at Bitwise, said the company had not requested a review, according to Coindesk.

It’s still not clear why the SEC chose to review its rejection of the Bitwise ETF.

The notice said that the Commission would review “the Division’s action pursuant to delegated authority and that the Division’s action pursuant to delegated authority had been automatically stayed.”

Interested persons may now submit their comments on the rejection by December 18, 2019.

Regulatory approval aside, analysts are still skeptic

According to Fundstrat’s Tom Lee, the current size of the Bitcoin market is too small to support an ETF. In Lee’s opinion, Bitcoin needs to be priced around $150,000 to cope with daily demand on an ETF.

Another problem has to do with price discovery, says Charles Lu, CEO, Findora. The SEC must see evidence of genuine price discovery. “The SEC will require surveillance-sharing agreements with significant cryptocurrency exchanges – a requirement that few foreign-domiciled exchanges will agree to.”

Therefore, the Bitwise ETF may still be a while launching, despite the SEC review.

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