The hopes of getting a Bitcoin exchange-traded fund approved in 2019 have all but been dashed, after a new bout of rejection was landed earlier this week as well.
On October 9, the United States Securities and Exchange Commission (SEC) published an announcement blocking the latest attempt to launch an ETF from Bitwise Asset Management and the New York Stock Exchange (NYSE) Arca, arguing that the proposal didn’t meet the requirements.
Insufficient investor protection
More specifically, the announcement claimed that the applicants didn’t meet the requirements relating to possible market manipulation and other illegal activities. The regulator believes that the NYSE Arca has been found wanting under the provisions of the Exchange Act, as well as the SEC’s Rules of Practice, particularly “the requirement that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices.”
The rejection is sure to sting, especially considering how confident the applicants were of their success in this round. On October 7, news medium CNBC reported that Matt Hougan, the Managing Director and Global Head of Research at Bitwise, expressed confidence in their chances of success.
As part of his optimism, Hougan noted that there had been significant growth in the crypto space over the past couple of years, adding, “Two years ago, there were no regulated, insured custodians in the Bitcoin market. Today, … there are big names like Fidelity and CoinBase [with] hundreds of millions of dollars of insurance from firms like Lloyd’s of London.”
Sadly, however, it still isn’t enough for the watchdog to get them their green light,
Litany of rejections
The rejection also definitely doesn’t bode too well for the other Bitcoin ETF proposals that are on the SEC’s table. The SEC initially pushed back its decision on three ETFs; one from Bitwise and the NYSE Arca, and the other two by asset managers VanEck SolidX and Wilshire Phoenix.
However, the VanEck SolidX ETF proposal has already been withdrawn, with the news release to that effect blaming the decision on the continuous delays by the SEC in approving a rule change. Given that the proposal for this Bitcoin ETF has been in front of the SEC for the better part of a year now, it is rather understandable that they would want to throw in the towel.
In addition to that, the Wall Street Journal reports that VanEck and SolidX will be launching a limited version of their ETF to institutional investors. They could be wanting to focus more on that, pending when the SEC chooses to come around.
As for Wilshire Phoenix, it’s pretty much the same delay story as well. The company’s Bitcoin and Treasury Investment Trust was supposed to get its decision on September 29, but five days prior, the SEC announced that it had just begun proceedings to determine whether to accept or reject the proposal.
The agency has a legally mandated 180-day deadline from the filing date to make a decision. The countdown began on July 1, so the Commission has until December 28, 2019, to make a decision. Now that the Bitwise application has been rejected, this isn’t a good omen at all.