The U.S. Securities and Exchange Commission (SEC) has rejected WisdomTree’s application for a spot Bitcoin exchange-traded fund (ETF).
The SEC has rejected another Bitcoin ETF
The approval would have allowed retail and institutional investors to invest in a regulated financial product that holds Bitcoin without investing directly in the cryptocurrency. However, the SEC explains in a letter that the rejection is necessary to protect investors from “fraudulent” and “manipulative” actions. The decision was not unexpected, as the chairman of SEC, Gary Gensler, has indicated several times that he prefers a Bitcoin futures ETF to one that holds Bitcoin directly.
Last month, the SEC rejected investment firm VanEck’s proposal for a spot Bitcoin ETF. And Bloomberg Intelligence’s James Seyffart says the regulator will most likely reject Kryptoin’s spot ETF offering before Christmas as well. One of the main reasons Gensler is against a Bitcoin spot ETF is that Bitcoin trades on unregulated exchanges around the world that operate outside the U.S.
Futures-based ETFs were approved in October
While approval of a spot Bitcoin ETF seems highly unlikely this year, the SEC has already approved ETFs based on futures contracts. The ProShares Bitcoin Strategy ETF (BITO) and the Valkyrie Bitcoin Strategy ETF (BTF) began trading in the U.S. in October, leading to a significant rise in the price of Bitcoin. While investors may have been hoping for another rally following the approval of a spot Bitcoin ETF, it does not look like that will be the case in December.