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After deferring the decision several times, the U.S. Securities and Exchange Commission (SEC) has officially rejected asset manager WisdomTree’s spot Bitcoin (BTC) exchange-traded fund (ETF).
The SEC rejected a proposed rule change from the Cboe BZX Exchange to list and trade shares of WisdomTree’s Bitcoin Trust.
The regulator cited the lack of surveillance sharing agreements and the inability to prevent fraudulent or manipulative practices in the BTC spot market, as the reason for rejection. It said that any rule change in favor of approving the ETF would not be “‘designed to prevent fraudulent and manipulative acts and practices” nor “protect investors and the public interest.”
The agency said that neither did BZX provide enough data to conclude that the cryptocurrency market is resistant to manipulation, nor address concerns about possible sources of fraud and manipulation, such as wash trading and other risk factors. In its defense, BZX used the examples set by crypto futures products with the CME Group in its argument for approval, but the SEC rejected them as evidence towards accepting a spot crypto ETF, reported Coin Telegraph.
This is not the first time that the SEC has rejected a Bitcoin ETF proposal. Last month, the SEC rejected investment firm VanEck’s proposal for a spot bitcoin ETF. VanEck’s bitcoin futures ETF began trading in mid-November.
SEC Chair Gary Gensler has indicated a preference for a bitcoin futures ETF over an ETF that holds bitcoin directly, many times.
In October, two bitcoin futures ETFs, the ProShares Bitcoin Strategy ETF (BITO) and the Valkyrie Bitcoin Strategy ETF (BTF), began trading in the U.S., leading to a significant rally in the price of bitcoin.
(With inputs from Coin Telegraph)