SEC put a rewritten Bitcoin-and-Treasury trust proposal back before the public

The Securities and Exchange Commission on October 15, 2019 published NYSE Arca’s fully rewritten proposal to list the United States Bitcoin and Treasury Investment Trust, putting an unconventional bitcoin exchange-traded product back before the public for comment. The filing did not approve the fund. It made the amended design—the version regulators would evaluate—part of the formal record.

That distinction mattered. U.S. sponsors had repeatedly tried to package bitcoin exposure for exchange trading, while the SEC focused on manipulation, surveillance and investor-protection questions in the underlying market. NYSE Arca and sponsor Wilshire Phoenix were testing a different answer: pair bitcoin with short-term U.S. Treasury bills and vary the mix under a rules-based index instead of holding only bitcoin.

A proposal rebuilt around volatility

The SEC record says NYSE Arca first filed the rule change on June 12, 2019. The Commission opened proceedings on September 24 to determine whether to approve or disapprove it. NYSE Arca then filed Amendment No. 1 on October 4. The amendment replaced and superseded the original filing in its entirety, and the October 15 notice solicited comment on that rewritten version. As of October 10, the Commission had received nine comment letters.

Under the proposal, the trust would hold only bitcoin and U.S. Treasury securities maturing in less than one year, with limited cash for transactions, maturities, expenses and redemptions. Its target allocation would track the Bitcoin Treasury Index. That index was designed to rebalance monthly between a bitcoin component and a Treasury component using a passive formula based on bitcoin’s daily volatility.

The proposed trust was therefore not a plain spot-bitcoin wrapper. Its sponsor presented Treasury allocation as a mechanism to reduce the volatility associated with bitcoin without derivatives or leverage. That was the applicant’s design claim, not a result established by the SEC and not a guarantee about investor losses.

Custody, pricing and the market-integrity test

The filing assigned bitcoin custody to Coinbase Custody Trust Company, with the assets to be maintained in cold storage. UMB Bank would hold cash and Treasuries. For valuation and monthly weighting, the trust would use the CME CF Bitcoin Reference Rate, a once-daily dollar benchmark derived from eligible BTC/USD spot transactions across constituent platforms. The trust would not hold bitcoin futures.

For intraday information, an indicative fund value would use the CME CF Bitcoin Real Time Index and be disseminated every 15 seconds during NYSE Arca’s core session. Those mechanisms were meant to make pricing observable, but they did not settle the larger legal question: whether the exchange had shown that its rules were designed to prevent fraudulent and manipulative acts and protect investors.

The amendment also proposed changing NYSE Arca Rule 8.201-E so commodity-based trust shares could be issued and redeemed for the underlying commodity, cash, or both. The trust’s own shares, however, were proposed to be issued for U.S. dollars. The operational details were part of the applicant’s case that regulated custody, benchmark construction and cash handling could support an exchange-listed product.

What October 15 did—and did not—mean

The SEC invited written views on whether the amended rule change was consistent with the Exchange Act, with comments due 21 days after Federal Register publication. On October 15, no shares had been approved for listing, no launch date was established and the Commission had not endorsed the sponsor’s volatility or manipulation arguments.

The significance was procedural but real: a hybrid bitcoin-and-Treasury structure had advanced into a renewed public record immediately after another bitcoin exchange-traded fund proposal was rejected on October 9. The filing showed how sponsors were adapting product architecture to the SEC’s stated concerns rather than abandoning the effort.

Later context

On February 26, 2020, the SEC disapproved the NYSE Arca rule change. That later outcome clarifies the record but was not knowable on October 15, 2019 and does not change the event-day fact that the amended proposal remained under review.