Months after VanEck submitted its application, the United States Securities and Exchange Commission (or SEC) has officially disapproved VanEck’s spot Bitcoin exchange traded fund.
A Friday filing shows that the SEC has rejected a rule change proposed by the Cboe BZX Exchange for VanEck’s Bitcoin Trust to trade and list shares. The SEC stated that any rule change to approve the ETF would not “‘prevent fraudulent and manipulative acts or practices” nor “protect investors or the public interest.”
“The Commission concludes BZX has not fulfilled its burden under the Exchange Act, the Commission’s Rules of Practice and to show that its proposal is consistent the requirements of Exchange Act Section,” stated the SEC.
“It is vital that an exchange that lists a derivative security product must enter into a surveillance sharing agreement with markets trading the assets to allow them to access the information needed to detect, investigate and deter fraud and market manipulation as well as violations and violations of federal securities laws and regulations.”
After the publication of the offering in the Federal Register on March 19, the regulatory body had a maximum period of 240 days to decide whether to approve or deny it. The extension deadlines on April 28th and Sept. 8 gave the SEC until November 14th to make a decision. Eric Balchunas, senior ETF analyst at Bloomberg, said that the SEC would not approve VanEck funds because of its history of denials from investment firms with exposures to crypto. This prediction was confirmed by the SEC.
Balchunas stated that the SEC should address the inconsistency in not deeming CME an regulated mkt size in spot deny but then approving futures-eTFs. It’s a great point, but the SEC doesn’t care. It’s not there. Technical legality is more important than logic and reason.
Although the rejection is disappointing for many investors, the SEC approved ETFs that are linked to Bitcoin futures contracts. On October 10, shares of Valkyrie, a digital asset manager, and ProShares’ BTC strategy ETF were launched on U.S stock exchanges. Since then, ProShares’ ETF has risen to the top 2 percent of all ETFs in terms total trading volume — approximately $400 million worth shares traded on November 10.
Related: BlackRock says it has no plans to launch crypto ETFs before VanEck’s deadline
Bitcoin’s price plunged to $62,300, but then recovered to over $63,000. This price drop represents 9.7% since Bitcoin hit a record high of $69,000 in November 10.
Eileen Wilson –Technology and Energy
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