The US Securities and Exchange Commission has rejected a first Exchange Traded Fund (ETF) for Bitcoin.
The VanEck Bitcoin ETF, which has been in the test for more than seven months, could have pushed up the price of the digital currency.
“This order rejects the proposed rule change. The Commission concludes that the BZX has failed to meet its burden under the Stock Exchange Act and the Commission’s procedural rules … in particular the requirement that the rules of a national stock exchange “are designed to prevent fraudulent and manipulative acts and practices” and “To protect investors and the public interest,” said the SEC.
An ETF could have allowed institutional investors to buy crypto through readily available vehicles, but it was not certain that it would pass.
A senior ETF analyst at Bloomberg put the likelihood of the SEC approving the ETF at “likely 200-1”.
It is possible that this rejection could reverse the dynamics of the market, but it may not last for long. Other ETFs are being considered, including one from crypto lender BlockFi and investment firm Neuberger Berman.
“Optimism is growing in the market,” argued the crypto platform Luno in a research note published last week. “A refusal by VanEck does not necessarily mean that these other filings will receive the same verdict.”
However, the SEC has been more open to Bitcoin exchange-traded futures funds – starting in the US last month and touted as a major milestone for the crypto industry.
“A Bitcoin ETF will provide even more exposure to Bitcoin for those who might shy away from buying it directly on an exchange,” said Matt Senter, chief technology officer of the bitcoin reward app Lolli The independent one back then.
“By allowing individuals to invest in Bitcoin through ETFs that track the underlying asset, investors can learn about Bitcoin while taking advantage of aspects of the ownership experience that can be daunting to crypto newbies, such as navigating exchanges, Wallets and private keys. “