Dalia Blass, the director of the Division of Investment Management at the Securities and Exchange Commission, says the agency could soon approve a Bitcoin ETF.
The unlisted, closed-end interval fund will not provide daily redemptions nor be subject to considerable and unexpected liquidity demands during short periods, she commented during a keynote speech for the iCI Securities Law Development Conference.
Blass said the fund operators have satisfied regulator concerns around valuation, custody, liquidity, and efficient arbitrage mechanisms for digital asset-based ETFs, MarketsMedia reports.
The fund expects to generally value its bitcoin futures holdings at daily settlement prices reflected on a CFTC-registered futures exchange, consistent with the principles of the Investment Company Act of 1940 and U.S. GAAP,” said Blass. “With respect to custody, the fund will invest in cash-settled futures and so will not face the challenges presented by direct holdings of digital assets.”
Pricing mechanisms in unlisted funds do not depend on market makers or efficient arbitrage mechanisms. The fund’s initial cap will be $25 million and intends to eliminate potential market manipulation by providing access to the fund only via registered investment advisors. This will limit the size and future growth of the fund.
“No investment products are absolutely risk-free,” she said. “This can be particularly true with novel and previously-untested investment strategies. Investors should proceed with caution, ask questions, and consider their risk tolerance before investing.”
Last month, the SEC reviewed its rejection of the Bitwise Asset Managment ETF proposal. The initial rejection, published on October 9, remains in effect. The review empowered the public to comment on the rejection through Dec. 18, 2019.
The Commission had previously reviewed the rejection of the Tyler and Cameron Winklevoss Bitcoin ETF proposal.