The U.S. Securities and Exchange Commission (SEC) pushed a decision on WisdomTree's bitcoin exchange-traded fund (ETF) application to the autumn.
In a Tuesday order launching proceedings on whether or not the agency should approve the application, the SEC asked for feedback from the general public and industry experts on the WisdomTree application and whether the ETF would be a safe product for investors. Comments must be submitted within three weeks of the document's publication in the Federal Register, the national logbook, with rebuttals filed within seven weeks.
The SEC is currently reviewing over a dozen active bitcoin ETF applications. Industry participants, including WisdomTree, have also filed applications for an ether ETF product and a bitcoin futures ETF. The federal securities regulator has yet to approve any crypto ETF within the U.S., though proponents claim that a bitcoin ETF can help investors by creating a more regulated market.
The SEC has typically delayed making any firm decisions on bitcoin ETF applications as long as it legally could, meaning Tuesday's delay is no surprise. This is the second active application to proceed to this phase of SEC rulemaking in 2021, joining a similar application filed by VanEck, indicating the process for potentially approving an ETF continues to move ahead.
Proponents also believe that a bitcoin ETF will expand access to the crypto markets. Because an ETF is regulated, some fund managers, financial institutions or even retail investors may be more willing to purchase shares of an ETF, rather than buy bitcoin directly.
Still, the chances of the SEC approving a bitcoin ETF seem slim. SEC Chairman Gary Gensler has raised concerns about bitcoin market manipulation and investor protection during testimony before Congress. The agency has often cited market manipulation as a key concern in rejecting past bitcoin ETF applications.
Indeed, the SEC published questions around whether the ETF "would be susceptible to manipulation" and how the proposed product could be protected from fraudulent activity in its decision on Tuesday.
The SEC also questioned whether CME's bitcoin futures market is large enough to evade manipulation.
"What are commenters’ views on whether there is a reasonable likelihood that a person attempting to manipulate the Shares would also have to trade on CME to manipulate the Shares?," the document asked.
Ron Hammond, the Blockchain Association's director of government relations, tweeted that investor protection and market structure concerns remain top of mind for the agency, and said rumors suggest an ETF will not be approved this year.