The United States Securities and Exchange Commission, or SEC, has officially disapproved of asset manager WisdomTree’s spot exchange-traded fund (ETF) from Bitcoin (BTC), after postponing its decision several times this year.
According to a presentation on Wednesday, The SEC rejected a proposed rule change from the Cboe BZX Exchange to list and trade shares of WisdomTree’s Bitcoin Trust. Specifically, the SEC said that any rule changes 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 SEC concluded that BZX had failed to meet the listing requirements for a financial product under its rules in addition to the Exchange Act, saying that the proposed BTC ETF would not allow the commission to “obtain the information necessary to detect, investigate, and deter fraud and market manipulation, as well as violations of exchange rules and applicable federal securities laws and regulations. ” In addition, the SEC said that the exchange had not provided sufficient means “to prevent fraudulent and manipulative acts and practices” in any potential listing.
Specific, The agency alleged that BZX did not provide enough data to conclude that the cryptocurrency market is resistant to manipulation, nor did it address concerns about possible sources of fraud and manipulation, including laundering operations and other risk factors. Although the exchange used the examples set by crypto futures products with the CME Group in its argument for approval, the SEC rejected them as evidence to accept a spot cryptocurrency ETF.
“The Commission cannot conclude, based solely on BZX’s statements and in the absence of any evidence or analysis in support of BZX’s claims, that it is unlikely that trading in the ETP is the predominant influence on prices in the market for CME bitcoin futures “, the document said.
Since originally filing with the SEC on March 26, WisdomTree has seen the commission delay a decision on its 2021 spot Bitcoin ETF several times. The SEC opened the request to the public for comment in April and designated longer periods to approve or disapprove the proposed rule change in May, July and September. His reasoning for denying WisdomTree’s offer was similar to that of VanEck’s Bitcoin ETF, rejected in November.
Yet across the pond WisdomTree was able to list its publicly traded cryptocurrency product on the Euronext Paris and Amsterdam exchanges. The investment product, which is traded under the MEGA ticker, is backed by physical crypto assets, including BTC and Ether (ETH).
A separate ETF application for WisdomTree’s Ethereum Trust in the United States, first filed with the SEC in May, remains pending review. Furthermore, the agency is likely to reach a decision on an exchange-traded fund offering exposure to Bitcoin from Kryptocoin, with the target date set for December 24.
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