Wilshire Phoenix, a New York-based asset management firm, has responded to the United States Securities and Exchange Commission (SEC) rejecting its proposed Bitcoin (BTC) exchange-traded fund (ETF).

The firm states it is “very disappointed” by the SEC’s ruling, emphasizing that it went to great lengths to ensure compliance with the SEC’s expectations:

“We made every effort to get the SEC’s attention on this important issue, including undertaking extensive analysis that was made available to the SEC staff, submitting key data, and offering to provide additional information to facilitate the listing of a much needed regulated bitcoin-related ETP in the United States. Unfortunately, the Order shows that all of these efforts did not receive the SEC’s full attention.”

SEC ruling maintains threats to US investors

Wilshire Phoenix filed its proposed ‘United States Bitcoin and Treasury Investment Trust’ with the SEC during January 2019. The firm described the fund as “provid[ing] investors with exposure to Bitcoin in a manner that is more efficient, convenient and less volatile than purchasing stand-alone Bitcoin.”

Despite the firm making six amendments to its application in 13 months, the SEC rejected Wilshire Phoenix’s application on Feb. 26 citing market manipulation and investor protection concerns.

William Herrmann, Wilshire Phoenix’s managing director, responded by arguing that a regulated Bitcoin ETF would provide retail investors with a safer means to access exposure to Bitcoin, adding that cryptocurrency demand will continue to grow regardless of the SEC’s ruling:

“Many retail investors are already investing in this commodity and investor demand continues to grow each day. Our ETP was created to provide investors with exposure to bitcoin through a regulated and transparent vehicle that also mitigates volatility. In my opinion, the Commission has done a great disservice to the public by rejecting this application.”

SEC “unwilling” to approve products offering exposure to Bitcoin

On Feb. 26, SEC commission Hester Peirce, colloquially known as “Crypto Mom” in the cryptocurrency community, issued a dissenting statement in response to the ruling.

The Commissioner argues that the SEC “applies a unique, heightened standard” to the Exchange Act regarding cryptocurrency-related filings, adding that the order is “the latest in a long string of disapproval orders” issued regarding “Bitcoin-related products.”

As such, Peirce concludes that the SEC is “unwilling” to approve “any product” offering exposure to Bitcoin:

“This line of disapprovals leads me to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products—and only to bitcoin-related products.”

Herrmann echoed Peirce’s assertion, stating: “The SEC has created a test for Bitcoin-related [exchange-traded products] that is clearly inconsistent with the Exchange Act.”