Regulators took a small step closer on Friday toward addressing the brewing issue of a Bitcoin exchange-traded fund (ETF), a move that if approved would help the cryptocurrency become a more mainstream investment.

According to a notice published by the U.S. Securities and Exchange Commission (SEC), the agency will begin reviewing a rules change proposal filed by NYSE Arca and Bitwise Asset Management. The announcement comes a month after Bitwise proposed the Bitcoin ETF, which it said would account for regulatory concerns that have stymied similar initiatives.

The government shutdown had delayed the SEC from beginning its review. 

The SEC now has 45 days to approve or reject the proposal. If the agency requires more time for review, it would have to state the reasons, but could take an additional 90 days. It has 240 days to approve or reject the ETF. 

Observers of the cryptocurrency space have regarded the creation of a Bitcoin ETF as one of the most important developments for legitimizing the industry among the wider investment community.

"The biggest benefit of a crypto ETF is that the asset can make its way into retirement and brokerage portfolios in the existing wealth management value chain," said Lex Sokolin, the Global Director Fintech Strategy & Partner for Autonomous Research, a London-based research firm that tracks developments in financial services technology, among other topics.

Sokolin noted that "financial advisors and retirement planners make trillions of American savings and wealth" and that "the only acceptable instruments for diversification are, pretty much, mutual funds and exchange traded funds. An incremental small allocation to Bitcoin, which could have statistical characteristics different from traditional assets, may meaningfully increase the Sharpe ratio for most investors. No financial intermediary today can do this within an asset allocation framework without a traditional instrument."

The Sharpe ratio is a risk-adjusted measure of the performance of an asset.

The SEC has rejected a number of previous proposals, largely over concerns that there were not sufficient protections for investors. Among the rejections were two separate proposed ETFs by celebrity tech entrepreneurs Tyler and Cameron Winklevoss.

However, last week, one of the SEC's commissioners, Robert L. Jackson, said that he anticipated that the agency would eventually approve an ETF, satisfying "the standards that we've laid out."

The Bitwise Bitcoin ETF Trust would track the Bitwise Bitcoin Total Return Index, which encompasses the performance of Bitcoin and any hard forks. Hard forks occur when a cryptocurrency splits into two. It usually stems from changes in coding that offer benefits, but are incompatible with the foundational cryptocurrency.

The NYSE Arca, an offshoot of the New York Stock Exchange that trades stocks and options instead of large-cap stocks, will trade the Bitwise Bitcoin shares.

Bitwise said in a Jan. 10 press release that its proposed ETF would differ from "previously filed Bitcoin ETFs" because it will rely on regulated third party custodians to store the Bitcoin, and that the index would "draw prices from a large number of cryptocurrency exchanges, representing the majority of currently verifiable Bitcoin trading."

Bitwise's global head of research, Matt Hougan said in the release that the company had studied prior SEC concerns about a cryptocurrency ETF. 

"The SEC has asked thoughtful and relevant questions about the quality of the crypto trading ecosystem, the reliability of crypto pricing, the strength of the arbitrage function in crypto and the robustness of crypto custody," Hougan said."We have spent the past year researching these questions and look forward to discussing those findings with the SEC staff in connection with the filing and listing application."