SEC Quashes Dreams of Bitcoin ETF With Another Rejection

(Bloomberg) — The U.S. Securities and Exchange Commission disapproved the final proposal for a Bitcoin exchange-traded fund, seemingly destroying any remnants of hope from digital forex followers {that a} fund would get the inexperienced gentle this yr.

The SEC denied an utility Wednesday by Wilshire Phoenix and NYSE Arca Inc. to record a fund that wished to combine Bitcoin and short-term Treasuries, in accordance with an order posted on the regulator’s website. Bitcoin dropped greater than 6% to about $8,819 as of 4:13 p.m. in New York.

“The Commission concludes that NYSE Arca has not established that the relevant Bitcoin market possesses a resistance to manipulation that is unique beyond that of traditional security or commodity markets such that it is inherently resistant to manipulation,” the regulator stated. A Wilshire consultant didn’t instantly reply to a request for remark.

The SEC has lengthy urged issuers to handle a big selection of dangers and issues related to a possible crypto fund, together with manipulation, liquidity and custody points.

In a dissenting assertion, Commissioner Hester Peirce, who’s a proponent of cryptocurrency merchandise, stated the disapproval leads her “to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for Bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to Bitcoin-related products—and only to Bitcoin-related products.”

Wilshire’s proposal to combine Bitcoin with T-bills was meant, partly, to cushion towards crypto volatility. The agency’s proposal was the final looking for approval from the U.S. regulator after a quantity of others have been rejected or withdrawn. It’s a far cry from two years in the past, when a mass of would-be issuers have been duking it out to be the primary to market.

“I didn’t see any viable reason why this would be accepted when others were denied,” stated James Seyffart, an analyst with Bloomberg Intelligence.

Here’s what different market-watchers are saying:

“Bitcoin ETFs make sense based on the efficiency of the ETF investment wrapper, but we understand the regulators stance on surveillance and market manipulation concerns,” stated Frank Koudelka, international ETF product specialist at State Street. “We are excited about the prospects for ETFs leveraging the blockchain, regardless of if they are digital currency or traditional asset classes. This ultimately provides the ability to broaden distribution and enhance efficiency.”

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