October 13, 2019 Bitcoin ETFs continue to face regulatory and market structure challenges.

This week’s rejection of the Bitwise ETF by the SEC follows over a dozen similar rejections over the past few years. Such funds have used one of two approaches to track the underlying price of BTC: physically-backed ETFs would directly manage custody, while futures-backed ETFs would manage the trading of futures contracts that mirror the spot price. The proposed Bitwise ETF was to be physically-backed. While many hope that an ETF would broaden the potential investor base and allay certain custody challenges, the SEC has consistently rejected such offerings due to lack of investor protections against fraud and market manipulation.