SEC rejects VanEck’s Bitcoin ETF in the latest spot listing snub

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    The US Securities and Exchange Commission rejected a proposal for an ETF that would hold Bitcoin directly, shattering hopes that a long-awaited product would finally be released after the launch of the first funds tied to cryptocurrency futures last month receives.

    In a much-anticipated move, the SEC denied VanEck approval of its exchange-traded Bitcoin fund to trade on Cboe Global Markets Inc. In an order issued Friday, the regulator reiterated its long-expressed concern that a product based on the spot price of Bitcoin was against Could violate securities regulations as the market is too vulnerable to abuse.

    “The commission has consistently requested that the listing exchange have a comprehensive surveillance agreement with a regulated market of sizeable size in relation to bitcoin or that it can demonstrate that other means of preventing fraudulent and manipulative acts and practices are sufficient,” the SEC said. “The listing exchange did not meet this requirement.”

    Bitcoin extended losses after being rejected, but made up for some of them in afternoon trading. In New York, it fell 1.5% to $ 64,086 at 3:46 p.m. The largest cryptocurrency hit an all-time high of $ 68,991 this week.

    “We are obviously disappointed with today’s update from the SEC that the approval of our physical Bitcoin ETFs is declining,” said Jan van Eck, CEO of his company of the same name. “We continue to believe that investors should be able to get exposure to Bitcoin through a regulated investment product and that an ETF structure without futures is the superior approach.”

    SEC chairman Gary Gensler has said he is familiar with futures-based ETFs as Bitcoin futures are traded on highly regulated exchanges. This is not the case with physical bitcoin.

    Although many analysts have predicted that an Ether futures ETF will be the next iteration to hit the market, the physically backed Bitcoin ETF remains the product of the Holy Grail. The first application was made in 2013 by the Winklevoss twins, who are known for getting rich with Facebook Inc.

    The launch of two Bitcoin futures ETFs in October marked an important milestone for the industry. The first, the ProShares Bitcoin Strategy ETF, amassed more than $ 1 billion in assets in just a few days, while the second, the Valkyrie’s Bitcoin Strategy ETF, enjoyed calmer, but still stronger, adoption. Their premieres caused a lot of excitement over Wall Street adoption of crypto, and sparked optimism that the SEC might be more accessible to a physically-backed Bitcoin fund this time around.

    “The approval of futures ETFs has made people focus a little more on these announcements,” said Stephane Ouellette, CEO and co-founder of the crypto platform FRNT Financial Inc., on Bloomberg’s streaming program “QuickTake Stock”. “Prior to that approval, the SEC was basically kicking off those crypto ETF filings every three or four months – so I think they’re just getting back on it with the physical ETF.”

    Hester Peirce, a Republican SEC commissioner, told a Bloomberg conference earlier this month that the regulator had made public why it rejected a spot product. She was a vocal critic of the agency’s refusal to sign a physically backed fund.

    “The reason for this is that the Bitcoin markets don’t look like our regulated securities markets,” she said at the November 4th summit. “Regulators are most comfortable in markets that are similar to our own.”

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