No Bitcoin ETF on the horizon as Bitwise withdraws application

San Francisco-based asset management company Bitwise has withdrawn its Bitcoin ETF proposal despite reiterating its commitment to delivering the fund to investors just weeks ago.

According to a report by the US Securities and Exchange Commission (SEC) published yesterday, the firm believes that the “withdrawal request is consistent with the public interest and protection of investors”.

However, Bitwise has requested that “all fees paid to the Commission in connection with the filing of the Registration Statement be credited to the Registrant’s account for future use”, implying the firm intends to refile the application at a later date.

Bitwise follows CBOE in withdrawing Bitcoin ETF proposal

For many, the approval of a Bitcoin ETF (exchange-traded fund) by the SEC will be extremely bullish for Bitcoin. This is because an ETF will widen the net to a different class of investors who can access Bitcoin in a regulated and familiar fund format.

Investors in a Bitcoin ETF will also never have to store the digital asset themselves nor jump through the many hoops that investing in cryptocurrency involves.

However, despite various attempts over the past years to gain SEC approval, all Bitcoin ETF proposals have either been rejected or delayed.

The main reason for the SEC’s unwillingness to allow Bitcoin ETFs is its concern over market manipulation.

In fact, Jay Clayton, the chairman of the SEC, publically stated that he didn’t see a pathway to a Bitcoin ETF until concerns over market manipulation were addressed.

Market manipulation still a stumbling block for the SEC

Bitwise compiled a 226-page report for the SEC last year demonstrating how some 95% of Bitcoin trading volume was fake – and explaining the difference between real and suspicious exchanges.

Yet despite the firm’s notable efforts to address the SEC’s questions over market manipulation, the regulator remains concerned.

The Bitcoin ETF withdrawal comes just a couple of weeks after the asset manager assured investors that it remained committed to delivering a Bitcoin ETF.

Moreover, in November of last year, the SEC announced that it would reconsider its decision over the rejected ETF.

Bitwise is far from the only firm to propose a Bitcoin ETF to the SEC. There have been at least a dozen applications from the likes of CBOE and Gemini to ProShares and Direxion.

However, they have all been rejected or withdrawn. The Bitwise withdrawal follows that of VanEck/SolidX in September of last year.

It seems that those waiting anxiously for a Bitcoin ETF approval probably shouldn’t hold their breath.