03 Dec 2021 Arjun Agarwal
The US SEC Has Denied Another Spot-Based Bitcoin ETF Application
The United States Securities & Exchange Commission (SEC) announced that it has disapproved another spot-based Bitcoin exchange-traded fund (ETF).
The proposal came from WisdomTree after the regulator rejected a proposed rule change from the Cboe BZX Exchange to list and trade shares of the Bitcoin Trust from WisdomTree.
According to the regulator, the proposed spot Bitcoin ETF lacks surveillance sharing agreements, as well as the inability to prevent fraudulent or manipulative practices in the BTC spot market.
It is not WisdomTree’s first ETF denial, as the investment fund manager saw several delays in SEC’s final decision on a Bitcoin spot ETF in 2021. The company first filed its documentation for a spot ETF approval on March 26, 2021.
Furthermore, the SEC also dismissed a proposed rule change from the Cboe BZX Exchange to trade shares of the WisdomTree’s Bitcoin Trust, citing any rule change in favor of approving the ETF would disallow the protection of investors and the public interest.
The SEC further stated that the exchange had still to comply with the Exchange Act and the Commission’s Rules of Practice. The proposed Bitcoin ETF would not allow the agency to detect or obtain the necessary information to investigate fraud and market manipulation.
The commission also added that BZX did not provide sufficient information to clarify how the cryptocurrency market is resistant to manipulation or address concerns on potential fraud sources, manipulation, wash trading, and other key risk factors.
This is not the SEC’s first ETF denial, as VanEck’s Bitcoin ETF was rejected by the SEC for similar reasons in November. The SEC continues its rejection spree, amid increasing demand for cryptocurrency ETFs among digital asset investors.
However, the SEC approved several ETFs, which are tied to Bitcoin futures contracts, such as the ProShares Bitcoin ETF, which surpassed $1 billion in its first day of trading. In only 20 minutes of trading, the ETF traded over $280 million worth of shares and eventually recorded over $1 billion in trading volume when the market closed on October 19. ProShares Bitcoin ETF closed with an increase of 4.85% at $41.94, from the initial net asset value of $40.
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