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The SEC published its decision on Friday denying a proposed rule change that would allow the VanEck Bitcoin Trust to operate, thereby forcing investors to go through futures-based ETFs to gain exposure to Bitcoin. The VanEck Bitcoin ETF would have been a spot-based ETF, which would have tracked Bitcoin directly, mitigating risks for prospective investor unlike the riskier futures-based ETFs.

In Brief

  • The SEC rejected the VanEck Bitcoin Spot ETF on Friday.
  • The regulator emphasized that the rejection did not constitute disapproval of Bitcoin.
  • Bitcoin is above $64,000 at the time of publishing.

Bitcoin Spot ETF Thwarted Again

BZX Exchange filed for the rule change back in March. In its ruling, the SEC argued that BZX had not met its burden in regard to preventing “fraudulent and manipulative acts and practices” and “[protecting] investors and the public interest.”


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The regulator went on to say that in the absence of a “comprehensive surveillance-sharing agreement with regulated market of significant size” that would mitigate manipulation risks and other bad behaviour, BZX would need to establish that Bitcoin’s market “inherently possesses a unique resistance to manipulation beyond the protections that are utilized by traditional commodity or securities markets.”

The exchange asserted that it met both these requirements, one reason being that trading volumes in the futures markets on the CME and increased liquidity in the spot market had significantly decreased the potential for manipulation. In addition, BZX listed a number of reasons why the ETF could give investors access to Bitcoin in a “regulated and transparent exchange-traded vehicle that would act to limit risk.” One example would be reducing “risks associated with investing in operating companies that are imperfect proxies for Bitcoin exposure.”

Although the evidence was not deemed sufficient, the SEC emphasized “that its disapproval of this proposed rule change does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”

By doing so, the SEC is funneling investors to use a financial product that might not be in their best interest from a risk-based perspective.

Still, the ProShares futures-based ETF is one step closer to a Spot-based ETF, and ended up having one of the most heavily-traded opening days in ETF history.

Bitcoin is flat for the day, exchanging hands at $64,382 (Bitfinex) at the time of writing.


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