The SEC’s second rejection of a spot Bitcoin ETF highlighted fraud and manipulation issues.
The Securities and Exchange Commission of the United States denied WisdomTree’s application for a spot Bitcoin exchange-traded fund on Dec. 1. According to the decision, the SEC rejected WisdomTree Bitcoin Trust (BZX) due to a lack of “surveillance-sharing arrangements” and worries about market manipulation.
“The Commission concludes that BZX has failed to meet its burden under the Exchange Act and the Commission’s Rules of Practice of demonstrating that its proposal complies with the requirements of Exchange Act Section 6(b)(5), particularly the requirement that a national securities exchange’s rules be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest,'” the SEC order stated. Spot ETFs track the price of Bitcoin directly, while futures ETFs track the price of Bitcoin futures.
The SEC’s decision was the second rejection of a Bitcoin ETF based on the spot market. The Securities and Exchange Commission denied VanEck’s application to list and trade the Van Eck Bitcoin Trust ETF on the Chicago Board Options Exchange on Nov. 12, stating that the company “had not completed its burden under the Exchange Act.” Nonetheless, the SEC allowed the trading of two futures Bitcoin ETFs in October — the ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF.
The news had little effect on cryptocurrency investors. According to Wall Street Journal market statistics, the price of Bitcoin (BTC) has decreased marginally to $57,026 on Dec. 1 from $57,144 that morning. Since then, however, Bitcoin has fallen by double digits as the larger crypto market and stock market have all fallen on worries of the Omicron version and inflation, as well as a weaker-than-expected employment report. According to CNBC, Bitcoin’s price screamed down from around $57,000 to $47,000 in a 24-hour period from Friday morning to Saturday morning, a loss of more than 17%.
The next ETF applications are Valkyrie XBTO Bitcoin Futures Fund, which must be approved by Dec. 8, and Kryptoin Bitcoin ETF Trust, which must be approved by Dec. 24, after the SEC’s decision to extend the deadline for many Bitcoin ETFs from November to December.
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