For years multiple companies in the cryptocurrency ecosystem have tried to get the United States Securities and Exchange Commission (SEC) to approve a bitcoin exchange-traded fund (ETF). So far all efforts have been in vain.
Now the New York Digital Investment Group (NYDIG) is knocking on the door for authorities to discuss a new ETF proposal. This application incorporates investment bank Morgan Stanley as one of the authorized participants, rekindling hope for possible approval.
NYDIG introduced form S-1 on Tuesday, February 16, which includes a preliminary prospectus of what the investment fund would be. Some details that attract attention are the following: the product would be called NYDIG Bitcoin ETF, although it does not yet have an identifying ticker, and it would be managed by Bancorp Fund Services.
The NYDIG application lists investment bank Morgan Stanley as an authorized participant for the ETF. Source: Maciej Janiec / flickr.com
The document speaks that the custodian of all the BTC of the fund would be the NYDIG Trust Company. What’s more, only authorized participants could invest. The fund would pay the sponsor (NYDIG Asset Management) a unified annual commission of 0.50% in compensation for services rendered. If approved, the ETF would be listed on the NYSE Arca, a subsidiary of the NYSE Group.
«To achieve its investment objective, the trust will hold (hold) the bitcoins. The fund will value its assets daily in accordance with Generally Accepted Accounting Principles (‘GAAP’), which value bitcoin by reference to orderly transactions in the main active bitcoin market, ”the prospectus reads. As the main bitcoin market, the document refers to eligible exchanges or even OTC (over the counter) markets.
Factors that would allow approval of the bitcoin ETF
Unlike previous requests for the creation of bitcoin ETF funds in the United States, this time there are several elements that could tip the balance in favor of NYDIG and Morgan Stanley.
The first would be the wave of companies that are investing in bitcoin and incorporating it into their treasuries. It could also favor the greater regulation on a global scale that exists on cryptocurrencies. This includes the expansion of blockchain analytics and compliance companies like Chainalysis, CipherTrace and Elliptic, for example.
The bullish run on bitcoin and its historic prices are attracting more and more attention not only among the media, but also from financial superintendencies, banks and even payment processors that are already designing business models around bitcoin.
This push could be seen by the SEC authorities as an increase in the legitimacy of bitcoin. In fact, SEC Commissioner Hester Peirce recently stated that she felt they were ready for such a publicly traded product.
An ETF, according to the SEC, are registered investment companies that offer investors a way to pool their money in a fund that makes investments in stocks, bonds and other assets or in some combination of these investments and, as consideration, Investors receive interest earned from such investment pool.
CryptoNews reported last week that Canada had gotten ahead of the United States with the approval of the first ETF in North America. The Canadian firm Purpose Investments announced that there was received the go-ahead from regulators for an ETF based on the first cryptocurrency.
NYDIG’s application approval or rejection could take months. In fact, there is currently another active application to the SEC for the creation of such a fund. This is a request sent by VanEck Associates Corp.