SEC Rejects Bitcoin ETFs From Global X And NYDIG• March 12, 2022 6:24 pm • Comments
Although there have been several close calls, there are still no Bitcoin spot ETFs in the United States due to regulatory restrictions.
In recent news, the SEC has just rejected two new proposals for Bitcoin exchange traded funds where both the proposals were submitted last year in 2021.
The first proposal was to list an ETF on the NYSE Arca exchange and the second aimed to list an ETF on the Cboe BZX exchange.
Had either proposal been accepted, it would have been the first spot ETF to be listed on a major American exchange and provide greater access to the crypto markets through traditional financial services.
— Crypto Briefing (@Crypto_Briefing) March 11, 2022
In each case, the SEC concluded that the entity behind the proposal “[had] not met its burden…to demonstrate that its proposal [was] consistent with the requirements” of the relevant regulations.
In particular, the regulator said that the target exchange’s design was not sufficient to prevent fraud and manipulation, nor was it sufficient to provide protection to investors and the public interest.
NYDIG’s fund was one of many competing proposals that aimed to launch the first Bitcoin spot ETF. The SEC planned to make a decision in January 2022 but delayed its decision that same month.
The name of Global X’s Bitcoin Trust suggests a fund similar to already-operational Bitcoin trusts from Grayscale and Valkyrie, which would at first glance give it an advantage with regulators.
Yet it appears that this is not actually the case, as Global X’s SEC filing refers to the investment vehicle as an exchange-traded fund.
Due to the SEC’s recent rejections, institutions and investors are still keeping an eye out on when the first Bitcoin ETF will be listed if it ever happens.
This is not the first time that the SEC has blocked such proposals as the agency has previously blocked proposals from the likes of Fidelity , VanEk, and WisdomTree in the past year.
Although there are no spot ETFs listed in the United States, there are a number of options that have been approved in other nations if investors are trying to gain access to the markets.
For example, Canada had launched a spot ETF back in 2021 with Fidelity indicating the increasing acceptance of crypto within the finance world in Canada.
SEC Rejects More Spot Bitcoin ETF Applications from NYDIG and Global X https://t.co/ZpTUnOXB41
— BTCLOVER (@BTCLOVER11) March 12, 2022
Though the U.S. regulator has yet to approve any spot Bitcoin ETF application from financial institutions, investment vehicles linked to Bitcoin futures have had more success.
Many companies filed applications for BTC “strategy” ETFs following SEC chair Gary Gensler saying in August 2021 he would be more open to accepting exchange-traded funds based on crypto futures rather than through direct exposure.
As crypto ETF applications from other firms are still in the pipeline, at least one company is taking more of an initiative to seemingly put pressure on regulators.
Following the SEC delaying its ruling on whether to approve Grayscale converting its Bitcoin Trust into a spot BTC ETF, the asset manager launched a campaign calling on U.S. investors to submit comments to the SEC. The regulator is expected to reach a decision on the ETF by July 6.
These rejections from the SEC come during a time when the release of President Biden’s recent executive order turned out to be positive for the growth of the crypto industry from a regulatory standpoint.
The SEC denied NYDIG’s Bitcoin Spot ETF proposal this morning.
— Pomp 🌪 (@APompliano) March 11, 2022
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