The Securities and Exchange Commission has prolonged its review period for NYSE Arca’s proposal to list shares of the Bitwise 10 Crypto Index Fund (BITW) as an exchange-traded product, based on a Tuesday filing.
The choice sets up a key deadline of March 3 for the regulator to either approve or reject the conversion of the $1.4 billion fund, making a critical test for whether multi-crypto investment vehicles can successfully transition into exchange-traded securities.
The proposal, initially filed Nov. 14, seeks to convert listing BITW from its current over-the-counter trading status to a totally regulated ETP structure, based on the unique filing.
Read More: Bitwise Seeks to Convert $1.3B Crypto Index to ETP
The SEC said it needed additional “time to think about the proposed rule change and the problems raised therein,” but didn’t indicate within the filing why more time can be needed.
NYSE Arca proposed listing BITW under a latest rule 8.800-E category specifically designed for “Commodity and/or Digital Asset-Based Investment Interests,” the filing noted.
The fund currently holds 10 cryptocurrencies, with bitcoin comprising 72.7% of the portfolio, followed by Ethereum at 14.7% and XRP at 5.8%, based on the fund page.
If approved, the conversion would shift BITW from its current OTCQX Best Market quotation to exchange-traded status, potentially helping address the fund’s premium/discount issues through creation/redemption mechanisms, based on Bitwise’s initial announcement.
Over-the-counter trading typically presents challenges for investors, who often encounter reduced liquidity and the next likelihood of fraud or stock manipulation in comparison with exchange-listed products.
The fund currently trades at $60.95 while having a net asset value of $71.72, highlighting the pricing gaps that an ETP structure goals to reduce, based on the fund page.
The SEC has received no public comments on the proposal through the initial review period, based on the filing.
The commission’s prolonged review of BITW’s conversion proposal aligns with its standard 45-day extension period, commonly used when reviewing novel financial products. The March deadline gives regulators additional time to evaluate how a multi-crypto index product would function inside an exchange-traded structure.
Bitwise declined to comment on the pending regulatory filing.