The cryptocurrency industry would have to wait a little longer to welcome the first exchange-traded fund tracking Bitcoin, following the latest rejection of such a proposal by the United States Securities and Exchange Commission (SEC).
The regulator published today a notice showing its disapproval of a proposed rule change by Bitwise Asset Management to list a Bitcoin ETF on NYSE Arca, citing market manipulation and fraudulent activity concerns.
A section of the SEC order noted that NYSE Arca, the proposed trading venue for the planned ETF has not met “the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices.'”
Also, while Bitwise has sought to explain in its application that the real spot market for Bitcoin, is uniquely resistant to manipulation, the SEC does not agree as confirmed in today’s release.
Specifically, the SEC argued that the applicants have not proven that prices on the real platforms are insulated from prices in the rest of the market.
For instance, the SEC asserted that prices “based on fraudulent and manipulated activity platforms with fake or non-economic volume could be used to affect prices on the real platforms identified in the proposal.”
Bitwise as we first reported submitted its Bitcoin ETF proposal with the SEC in January shortly after the call-off of a government shutdown.
However, the latest disapproval brings Bitwise’s race for a Bitcoin ETF to an end, although the startup recently pledged to keep pushing on the matter regardless of any decision announced today.