SEC Rejected VanEck’s Bitcoin ETF As The Spot Wallet Failed To Follow Rules

SYNOPSIS

  • The Cboe BZX Exchange filed the application in March, requesting that the SEC amend its rules to allow it to list the VanEck bitcoin fund.
  • The SEC stated that the Cboe had not done enough to establish its ability to safeguard investors from fraudulent trading.

The Securities and Exchange Commission said Friday that it has rejected a VanEck bitcoin exchange-traded fund that would have tracked the digital currency’s price movements directly.

VanEck AND CBOE FAILING TO FOLLOW NORMS OF SEC

The Cboe BZX Exchange filed the application in March, requesting that the SEC amend its rules to allow it to list the VanEck bitcoin fund. The SEC stated that the Cboe had not done enough to establish its ability to safeguard investors from fraudulent trading.

This reasoning is consistent with the SEC’s prior denials of proposed ETFs that would directly track bitcoin. For almost a decade, companies such as VanEck and Cboe have been fighting to launch the first U.S. bitcoin ETF.

But the SEC has been hesitant to do so, citing worries about a lack of regulation and the potential for fraud and manipulation in the bitcoin market.
Several additional bitcoin ETF proposals are also awaiting approval.

The denial comes just weeks after the SEC approved the first futures-based bitcoin ETFs, the ProShares Bitcoin Strategy ETF, which debuted on Oct. 19 and saw a 4% gain on day one, and the Valkyrie Bitcoin Strategy ETF, which debuted on Oct. 22.

ETF’S AREN’T AS BENEFICIAL AS BITCOIN

The SEC has considered VanEck’s bitcoin futures ETF effective since October 23. Although some speculated that it would be the first to follow ProShares, it has yet to begin trading.

Many investors believe these futures-based products aren’t as beneficial as an ETF that tracks bitcoin directly, but some see them as a necessary first step toward one down the road. However, it may be a long journey.

Dogecoin’s Co-founder under the name Shibetoshi Nakamoto, expressed his views on Twitter regardless of the Bitcoin ETF’s rejection and encourages people not to worry about the small thing.

This year, after SEC Chairman Gary Gensler stated that he would be more open to a futures-based product, a flood of applications for futures-based ETFs flooded in. A number of other bitcoin futures ETFs are also awaiting SEC approval to begin trading.

Following the announcement of the SEC’s ruling, the price of bitcoin fell by less than 1%, but immediately recovered. Bitcoin went down roughly 3.1 percent to $63,182 in the last 24 hours.

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