SEC rejects VanEck’s spot BTC ETF application, yet again

  • The U.S. SEC on 10 March rejected the investment manager VanEck’s application to create a spot Bitcoin exchange-traded product (ETP).
  • The SEC alleges that no exchange has so far demonstrated its fund’s resilience to fraud.

The United States Securities and Exchange Commission (U.S. SEC) yesterday rejected the investment manager VanEck’s application to create a spot Bitcoin exchange-traded product (ETP), reported Reuters.

The SEC, in essence, rejected a change that would have allowed VanEck to establish the Bitcoin trust.

Commissioners Mark Uyeda and Hester Peirce immediately issued a statement criticizing the Commission’s decision not to approve the listing and trading of VanEck’s product.

The SEC opined that since there is no underlying regulated market, VanEck does not have a comprehensive surveillance-sharing agreement with a regulated market of significant size related to spot Bitcoin.

According to the commissioners, the SEC had previously not required any connection between the spot and futures markets for other commodity-based ETPs.

“It is also clear that the Commission is using a uniquely burdensome definition of ‘significant’ in its analyses of spot Bitcoin ETP filings,” read the letter. The SEC is legally obligated to explain changes to its policy for approving commodity-based ETPs, they added.

VanEck has a financial product that is linked to Bitcoin futures. It was in 2017 that VanEck began seeking approval for the product. For months, the SEC delayed making a decision on the company’s current, and third, application for a spot ETP.

SEC asks the exchange to demonstrate the fund’s resilience

However, it is not the first time that the SEC has rejected proposals for a Bitcoin spot ETP.

When Cboe BZX Exchange applied to the SEC last month to list Wise Origin Bitcoin Trust, the request was denied. Following that, the regulatory body issued a letter outlining its reasons for rejecting the proposal.

The exchange did not meet its responsibility of demonstrating that the fund is designed to prevent fraudulent and manipulative acts and to protect investors and the public interest, according to the letter.

There was no data or analysis to back up the claim that arbitrage across Bitcoin platforms helps to keep global Bitcoin prices aligned with one another, thereby preventing manipulation and eliminating any cross-market pricing differences.

As the authorities begin to control the crypto market further, it is not very soon that crypto spot EFTs would be listed for trading.