SEC Disapproval of Bitcoin ETF Rule Change
The United States Securities and Exchange Commission (SEC) has disapproved a proposal that would have allowed WisdomTree to list and trade shares of its spot Bitcoin (BTC) Exchange-Traded Fund (ETF) on the Cboe BZX Exchange. The announcement, made on October 11, comes after a series of delays and extended comment periods regarding the application, which WisdomTree first submitted on January 25.
Concerns Over Market Manipulation
The SEC cited concerns that the proposed rule change did not adequately address the need to prevent fraudulent and manipulative acts, as well as ensuring investor protection. Specifically, the regulatory body stated that the BZX exchange failed to demonstrate the capability to gather necessary data to detect and investigate potential market manipulation and fraud.
WisdomTree’s Response
Will Peck, WisdomTree’s head of digital assets, responded to the SEC’s decision, expressing the firm’s commitment to finding alternative ways for investors to gain access to cryptocurrency investments. Peck emphasized that WisdomTree values transparency and compliance, stating, “We know that regulatory concerns take time to address…we aren’t letting that stop us from innovating in other ways in the meantime.” He noted the slow-moving nature of regulatory processes but remained hopeful for future approval of a spot Bitcoin ETF.
Comparison with Previous Rejections
This latest rejection echoes a similar decision made in December 2021, when the SEC denied a spot Bitcoin ETF application from WisdomTree. The repeated indication that BZX cannot sufficiently control wash trading and other fraud risks in the broader Bitcoin spot market weighs heavily on the SEC’s reasoning. The Commission concluded that BZX did not meet the required standards for approval dictated by the Exchange Act, leading to the disapproval of the proposal.
Current Landscape of Bitcoin ETFs
To date, the SEC has yet to approve any spot crypto ETF applications in the United States, despite ongoing criticism from industry leaders and lawmakers. Since 2021, the SEC has allowed the launch of several Bitcoin futures ETFs, including those from ProShares and Valkyrie, thus spotlighting the continued divide in regulatory attitudes towards different kinds of cryptocurrency financial products.
Conclusion
WisdomTree’s experience underscores the ongoing challenges that cryptocurrency firms face in navigating the U.S. regulatory landscape. As interest in crypto investment vehicles grows, stakeholders will be watching closely to see how the SEC evolves its policies and whether there will be a path forward for spot Bitcoin ETFs in the future.
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