The United States Securities and Exchange Commission, or SEC, officially rejected the application of the First Trust SkyBridge Bitcoin ETF Trust after several delays.
In a Thursday filing, the SEC rejected a rule change proposal from the New York Stock Exchange, or NYSE, Arca to list and trade shares of the First Trust SkyBridge Bitcoin ETF Trust. The agency said any rule change in favor of ETF approval would not be “‘designed to prevent fraudulent and manipulative acts and practices” or to “protect investors and the public interest.”
The decision comes after SkyBridge first applied for a Bitcoin ETF to be listed on the New York Stock Exchange in March 2021. The SEC twice designated a longer period to approve or reject the proposed rule change for the ETF in July and November before reaching his decision today.
In its rejection, the SEC said that the NYSE had failed to meet the listing requirements for a financial product under its rules of practice, as well as those of the Exchange Act. Under these restrictions, exchanges wishing to list a BTC ETF must have “a comprehensive shared surveillance agreement with a regulated market of significant size related to the underlying or reference bitcoin assets.”
NYSE Arca used a $10 million market order example to claim that buying and selling large amounts of Bitcoin (BTC) would have a “negligible impact on the market.” The exchange also hinted at Tesla’s $1.5 billion BTC purchase in February as an example of gaining crypto exposure through the company’s stock, arguing the need for a different investment vehicle with exposure to BTC versus to “imperfect bitcoin intermediaries” who only provide “partial exposure to bitcoin along with additional risks.”
The commission rejected these claims, citing similar reasons for rejecting Bitcoin spot ETFs from asset manager VanEck in November and WisdomTree in December. To date, the SEC has not approved any ETFs with direct exposure to the flagship cryptocurrency, but has given the green light to BTC futures-linked offerings, including those from ProShares and Valkyrie.
Another decision on the application for a Bitcoin ETF from the New York Digital Investment Group, or NYDIG, is expected to be made on March 16. The application is still under review after being delayed on January 15.