The SEC has rejected VanEck’s spot-based ETF, citing the risk of “fraud and manipulation” in the Bitcoin spot market.
The Securities and Exchange Commission, SEC, had until Nov. 14 to decide whether to accept or deny the VanEck Bitcoin ETF — the first exchange-traded fund in a lengthy list of other “spot” bitcoin ETFs on the regulator’s application desk. However, the SEC has disapproved of it, noting the vulnerability of the Bitcoin spot market to “fraud and manipulation.”
The SEC Rejects VanEck’s Bitcoin ETF Based on Spot Prices
According to a Friday filing, the SEC denied the Cboe BZX Exchange’s request for a rule modification that would have allowed it to list and trade shares in VanEck’s Bitcoin (BTC) Trust. Without equivocation, the SEC indicated that sanctioning the ETF would be detrimental to investors and the public interest, regardless of how such a regulation would promote fraudulent and manipulative conduct and practices.
Interestingly, this rejection was widely anticipated in the cryptocurrency world in light of two recent events; To begin with, SEC Chairman Gary Gensler has often expressed the commission’s worries about extending crypto products, specifically a “spot” Bitcoin ETF. He has maintained throughout that nothing like that can exist until there is a clear law establishing which regulatory authorities have responsibility for the different crypto areas, such as cryptocurrency exchanges.
Another sign of impending rejection is the law that was bundled with the current infrastructure bill, which imposes onerous reporting requirements on cryptocurrency.
It’s unsurprising that industry experts, including Bloomberg’s senior ETF analyst Eric Balchunas, predicted the SEC would reject the VanEck fund, a forecast that proved to be accurate.
Considering that the SEC delayed making a judgment on the application at least twice prior to today, there is a ray of optimism there. Therefore, it is very apparent why, now that the maximum 240-day review time has expired, the decision reached must be implemented.
However, a perpetual concern on everyone’s mind would be if crypto aficionados are deluded into believing that a bitcoin ETF would ever materialize.
The key problem is a jurisdictional one and a complicated one at that. It is about whether it should be regulated by the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
While Bitcoin is a commodity and so should be regulated by the CFTC, a Bitcoin ETF is a security and thus should be regulated by the SEC. As a result, the SEC may be compelled to preserve the status quo until a clear regulatory authority over other components of the crypto ecosystem, such as exchanges, is established.
In summary, the wait for a bitcoin ETF is set to become unbearably lengthy, but never rule out the idea.
Also read: AMC Now Accepts Payment In Bitcoin, Ethereum, And These Popular Altcoins
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