The SEC has rejected a Bitcoin ETF on the spot market.

The SEC denied a Bitcoin spot ETF, citing the risk of fraud, sending BTC prices down for a brief period. The US Securities and Exchange Commission denied a Bitcoin spot ETF on Friday, only one month after permitting a Bitcoin futures exchange-traded fund to trade on the New York Stock Exchange, propelling BTC values to new all-time highs.

a brief summary

  • The SEC issued a long-awaited ruling on Nov. 12 rejecting Van Eck's petition to list the Van Eck Bitcoin Trust ETF. Van Eck is a worldwide ETF investment management organization. BTC's price dropped to $62,353 after the rejection order was issued, but it quickly recovered to around $64,500 within hours.
  • Allowing the fund to trade would be incompatible with "prevent[ing] fraudulent and manipulative actions and practices" and "protect[ing] investors and the public interest," according to the SEC's disapproving order.
  • A Bitcoin spot ETF would follow the price of actual Bitcoin, whereas a Bitcoin futures ETF would follow the price of Bitcoin futures contracts.
  • The decision came as no surprise. "The SEC has been consistent in its assessment that a spot Bitcoin ETF does not safeguard investors against fraud or manipulation," said Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research, an independent financial research organization. That remains a significant obstacle to overcome, and it seems probable that no spot ETF will be approved in the United States for some time."
  • ProShares Bitcoin Strategy ETF, a Bitcoin futures ETF, had started trading on the NYSE a month before, propelling the price of BTC to an all-time high of US$67,000 the next day.
  • So why would the Securities and Exchange Commission accept a derivative product but not one that tracks genuine Bitcoin? "The underlying market in the crypto area is not as regulated as derivatives," Alma Angotti, partner and global legislative and regulatory risk head for global consulting firm Guidehouse, She claims that a Bitcoin spot ETF would have less costs, making it cheaper and more appealing to investors, but the SEC is hesitant to allow such direct investment due to the volatility of Bitcoin values.

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