Wilshire Phoenix, a Newyork based investment company seems determined to launch a Bitcoin-only retail investment product. After the rejection of the ETF proposal by the SEC in February, the Financial Services firm is now looking to compete with Grayscale’s Trust Fund products, but on a larger scale.
Earlier this year in February, the SEC rejected the Bitcoin ETF approval ‘citing a lack of proof that the Bitcoin market cannot be manipulated.’ A Bitcoin ETF is important because of its ability to reach out to retail investors, pension funds, and mutual funds with minimal custody risks. Until now, the facility has been available only to accredited investors and institutions via the Grayscale Trust Fund.
Publicly Traded Bitcoin Fund
It is a Bitcoin-only fund as the filing cites that ‘The Trust will have no assets other than bitcoin.’ Wilshire Phoenix proposes that the shares be made available for public trading on OTC Markets Group, Inc.’s OTCQX Best Marketplace.
The price of Bitcoin [BTC] will be procured from CME CF BRR (Bitcoin Reference Rate) to calculate the NAV, similar to know it’s done on Grayscale. Moreover, Fidelity Digital Assets will act as physical custodians of the Bitcoins.
The filing lists a plethora of risk factors and conditions that could affect the fund in any way, and how they are planning to mitigate the risks. This includes geopolitical risks, regulatory risks, or even sudden loss of confidence in crypto exchanges due to a hack or discovery.
The Trust Fund is similar to Commodity ETF (Exchange Traded Funds) which gives exposure to the futures/derivatives contracts of physical commodities. Popular types of commodities include precious metals, such as gold and silver, and oil and gas. Although, the Bitcoin Commodity Trust will only keep custody of the Bitcoins, and will not engaging in derivatives buying/selling. The sponsor fee is 0.9% and the premium will be calculated on the basis on the market.
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