NYSE Arca Withdrew the Bitwise Bitcoin ETF Listing Proposal

NYSE Arca asked the U.S. Securities and Exchange Commission on January 13, 2020, to withdraw the exchange rule filing for the proposed Bitwise Bitcoin ETF Trust. The two-page letter made the request effective on January 13 and said Bitwise Asset Management needed more time to address concerns raised in an earlier disapproval order.

The action ended the proposal’s then-current route toward an exchange listing. It did not approve the fund, reverse the regulator’s objections or establish a new legal status for bitcoin. It also was not a new SEC rejection on January 13: the unusual procedural posture was that an October 2019 staff-level disapproval had been stayed while the Commission reviewed it.

A year-long application stopped short

NYSE Arca originally submitted the proposed rule change on January 28, 2019. The SEC published it for comment on February 15. An amendment replaced the original filing, and the agency published the revised version and opened formal proceedings in May.

On October 9, 2019, the SEC’s Division of Trading and Markets, acting under delegated authority, disapproved the proposal. On October 15, the Commission notified NYSE Arca that it would review the division’s action; that review automatically stayed the disapproval. On November 12, the Commission invited statements supporting or opposing the delegated decision.

That sequence meant the file remained alive, but unresolved, entering 2020. NYSE Arca’s January 13 withdrawal removed the rule-change proposal while that review was pending. The exchange explicitly tied the withdrawal to Bitwise’s need to answer the October order’s concerns more fully.

Why the SEC had objected

The proposal sought to list shares of a trust designed to give exchange investors bitcoin exposure. That required NYSE Arca to show that its rules were consistent with Exchange Act Section 6(b)(5), including requirements aimed at preventing fraudulent and manipulative practices and protecting investors.

Bitwise had argued that economically meaningful bitcoin trading was concentrated on a smaller group of venues, that the proposed valuation process was resistant to manipulation and that CME bitcoin futures supported market surveillance. The October order did not accept that the record met the applicable standard.

In particular, the division concluded that NYSE Arca had not established either that the underlying bitcoin market was inherently resistant to fraud and manipulation or that the exchange had a surveillance-sharing agreement with a regulated market of significant size related to bitcoin. Those findings addressed whether the exchange had carried its statutory burden for this proposed listing. They were not a general declaration that owning or trading bitcoin was unlawful.

What January 13 changed

The withdrawal mattered institutionally because it closed one of the active paths for placing spot-bitcoin exposure inside a U.S. exchange-traded wrapper. Investors could not treat the stayed review as an eventual approval, and the trust’s shares could not begin NYSE Arca trading under the withdrawn filing.

The letter did not provide a new timetable, revised product design or commitment that another filing would succeed. Nor did it supply evidence about bitcoin’s price response, trading volume or investor flows on January 13. This reconstruction therefore makes no market-performance or causation claim.

The narrow event-day conclusion is procedural but consequential: after a sequence of filings, comments, amendment, disapproval and Commission review, NYSE Arca withdrew SR-NYSEArca-2019-01. The regulatory questions around market manipulation and surveillance remained unanswered in a form the exchange and sponsor were prepared to defend through that application.