The U.S. Securities and Exchange Commission on Dec. 1 rejected the application of a spot Bitcoin exchange-traded fund by New York-based sponsor WisdomTree. The SEC cited the lack of “surveillance-sharing agreements” and concerns about market manipulation in rejecting WisdomTree Bitcoin Trust (BZX), according to the order.
Fast facts
- “The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), in particular, the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest,’” stated the SEC order.
- Spot ETFs have direct exposure to Bitcoin’s price while futures ETFs are a derivative product based on the price of Bitcoin futures.
- The SEC’s decision marked the second rejection of a spot market Bitcoin ETF. On Nov. 12, the SEC rejected VanEck’s application to list and trade the Van Eck Bitcoin Trust ETF on the Chicago Board Options Exchange, citing it “has not met its burden under the Exchange Act.” Yet two futures Bitcoin ETFs — ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF — were approved by the SEC to trade in October.
- The news did not rattle crypto investors. At the close of Dec. 1, the price of Bitcoin (BTC) had dropped slightly down to $57,026 from $57,144 that morning, according to Wall Street Journal market data. Since then, however, Bitcoin suffered a double-digit fall as the broader crypto market as well as the stock market all went red on fears of the Omicron variant and inflation, and a weaker-than-expected jobs report. In a 24-hour period from Friday morning to Saturday morning, Bitcoin’s price shrieked down from about $57,000 to $47,000, a loss of more than 17%, according to CNBC.
- The next ETF applications awaiting a decision are Valkyrie XBTO Bitcoin Futures Fund, by a deadline of Dec. 8, and Kryptoin Bitcoin ETF Trust by Dec. 24, after the SEC pushed its decision deadline on several Bitcoin ETFs from November to December.