Commission opens comment period and review of Bitwise denial

On November 12, 2019, the SEC ordered a review of the disapproval by the Division of Trading and Markets’ (TM) of the NYSE Arca application to list shares of the Bitwise Bitcoin ETF Trust. The orders opens a 30 day comment period following publication in the Federal Register in which the Commission seeks input from the public on the disapproval order. Industry participants may submit comments here or by emailing rule-comments@sec.gov with SR-NYSEArca-2019-01 in the subject line.

Why it matters:

• This review is unlikely to result in a reversal of TM’s disapproval action. Still, this review gives the industry the opportunity to provide direct comments to the Commission and Staff regarding the analysis – both by Bitwise and by TM – of bitcoin markets.
• The Commission-level review was triggered under Rule 431, a little-used procedural maneuver through which a Commissioner may stay (temporarily halt) an action taken by a Division. Rule 431 was used at the request of CBOE BZX when TM disapproved the application to list Winklevoss Bitcoin Trust shares in 2017 and resulted in the more robust 2018 rejection. It appears, in this circumstance, however, that one or more Commissioners pulled the order for review without third party request. Rumor is it was Commissioner Hester. Interestingly, there’s no time limit for this sort of review. Stay tuned.

The original Bitwise disapproval can be found here.

(h/t @Xethalis)