One River’s Carbon-Neutral Bitcoin ETF Gets Rejected By SEC

May 31, 2022 7:27 pm

So far, it seems that the SEC has still manage to reject every single spot Bitcoin ETF that has been submitted for approval.

The latest one that just got rejected by the agency is One River’s carbon neutral ETF which adds it to a long list of others rejected this year.

The reasoning that the SEC used for the rejection this time is that it lacked sufficient investor protection which is pretty much the same reasoning that they use every time.

However, the crypto community is debating whether the SEC’s definition of investor protection and many believe that there are other ulterior reasons for the constant rejections.

CoinDesk reports:

The proposal to list on the NYSE Arca exchange lacks sufficient investor protections, the SEC said, which is similar verbiage used by the agency in denying other spot bitcoin (BTC) ETFs.

One River submitted paperwork for the ETF in May 2021, and the SEC in March announced a delay in its decision.

This particular spot ETF application differed from others in that One River pledged to buy and dispose of carbon credits to account for the emissions associated with the bitcoin in the fund.

While the SEC has green-lit a number of futures-based bitcoin ETFs, it has denied (or otherwise delayed) all spot bitcoin ETFs brought before it.

To name two, the agency in March denied applications submitted by NYDIG and GlobalX.

So far, only future-based crypto ETFs have been approved by the SEC with the latest one that got approved being the one that was submitted by Valkyrie.

Many are hoping that the approval of future-based crypto ETFs will eventually lay the legal foundation that is needed to finally approve spot crypto ETFs.

It is expected that this will be aggressively pursued by asset management firms which investors believe will bring a huge influx of new capital into the crypto markets.

After all, it is clear that new regulation is definitely needed in order to clearly define what the guidelines are for the industry.

Otherwise, it would all be up to interpretation to government agencies like the SEC which will stifle growth and innovation.

CryptoPotato reports:

More specifically, the watchdog outlined Section 6(b)(5) and precisely the requirement that the rules of a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.”

The SEC outlined that this is the same reason it has been rejecting other spot Bitcoin ETFs and also said that for it to approve one:

“… an exchange that lists bitcoin-based exchange-traded products can meet its obligations under Excange Act Section 6(b)(5) by demonstrating that the exchange has a comprehensive surveillance-sharing agreement wit a regulated market of significant size related to the underlying or reference bitcoin assets.”

While expected, the SEC’s decision hasn’t deterred other big names to file for a spot Bitcoin ETF.
Most recently, CryptoPotato reported that Cathie Wood’s ARK Invest filed for another one.

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