The US Securities and Exchange Commission Ruins Cryptocurrency Investors’ Christmas
The SEC has once again denied applications for spot Bitcoin ETFs. This time around, Valkyrie and Kryptoin ETFs have been denied.
Valkyrie and Kryptoin’s petitions were denied by the SEC in a public ruling. The Commission used the same grounds they had previously used to deny comparable items, citing concerns about consumer protection and fraud.
The SEC said in its announcement that the businesses “failed to establish that their plans comply with the standards of Exchange Act Section 6(b)(5).” Additionally, they clarified that the goods were not “intended to prevent fraudulent and manipulative conduct and practise” or “to safeguard investors and the public interest.”
Exchange-Traded Funds (ETFs) are financial products that enable investors to obtain exposure to a certain commodity without actually acquiring it. Rather than that, it entails the acquisition of shares that vary in response to the commodity price to which they are linked. A product backed by Bitcoin will enable more institutions to participate in the market without the need to create wallets and secure the keys.
The announcement came as a surprise to some, who had thought the SEC would take a more favourable attitude. In 2021, the regulator declined four applications for spot Bitcoin ETFs and showed little or no indication of altering its mind on a physically-backed Bitcoin ETF. VanEck was the first corporation to be refused in November, having submitted its application in December 2021 and waiting over a year for a judgement.
“The Commission has regularly requested that the listed exchange enter into a thorough surveillance-sharing arrangement with a regulated market with a sizable Bitcoin market, or show that other measures of preventing fraudulent and manipulative conduct and practises are appropriate. The listing exchange did not comply with that criteria,” the SEC said.
WisdomTree was the next to be disappointed. The SEC issued its ruling earlier this month. On the other hand, WisdomTree was forced to wait seven months for a judgement. The regulator expressed the same unhappiness with consumer protection and fraud prevention as in prior instances, expressing displeasure with consumer protection and fraud prevention.
A Month To Remember?
However, all hope is not lost, as the SEC is considering two further “physically” backed Bitcoin ETF ideas. Bitwise and Grayscale have submitted suggestions.
Grayscale intends to transform its $32.9 billion Grayscale Bitcoin Trust into a spot Bitcoin exchange-traded fund (ETF). Bitwise and Grayscale presented their bids on October 14th and 19th, respectively.
However, Gary Gensler’s SEC has postponed the decision to February 1st and 6th, 2022. “The Commission believes it is appropriate to extend the time frame for action on the proposed rule change to provide adequate time to examine the proposed rule change and any comments received,” the statement states.
Investors are confident that the Commission is close to approving ETFs, and 2022 might be the year when regulation becomes more clear for market players.