SEC Rejects The VanEck Spot Bitcoin ETF Application

Key Takeaways

• The US Securities and Exchange Commission rejected VanEck’s Bitcoin spot ETF application
• The SEC cited securities reasons, indicating fears of possible misuse by cryptocurrency exchanges
• The decision comes after nearly a month when the SEC approved the first Bitcoin futures ETF in the US

YEREVAN (CoinChapter.com) — The United States Securities and Exchange Commission has reportedly rejected the application from VanEck for spot Bitcoin ETF trading. Based on the order released on Friday, the SEC has cited concerns about possible fraud and manipulative practices by cryptocurrency exchanges.

Senior ETF analyst Eric Balchunas shared the news in a thread on Twitter.

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The SEC Denying VanEck Spot Bitcoin ETF Is No Surprise

On March 1, 2021, Cboe BZX Exchange, Inc. approached the Securities and Exchange Commission (SEC) proposing a rule change to list and trade shares of the VanEck Bitcoin Trust under BCommodity-Based Trust Shares. The SEC has decided against it.

The SEC had delayed a decision on the application twice before. However, with the maximum 240-day review period over, the commission had to give its verdict latest by Nov 14. Since that deadline fell on a Sunday, the SEC decided to publish its resolution on Friday.

 The SEC, having given its reasons, issued the following,

“The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), in particular, the requirement that the rules of a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.” 

According to the 2018 disapproval letter, the SEC had quoted similar concerns when turning down the application.

This decision comes as no surprise. Recently, SEC Chairman Gary Gensler made it clear that he would rather support ETF if they were based on Bitcoin futures rather than the cryptocurrency itself (Spot ETF).

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BTC Price Likely To Be Impacted Following VanEck Spot Bitcoin ETF Rejection

Days after making his stance clear, the SEC chair approved the first Bitcoin futures-based ETF in the United States. The ProShares Bitcoin Strategy ETF hit the stock markets on Oct. 19, followed by the Valkyrie Bitcoin Strategy ETF, which began trading on Oct. 22.

Following the approvals, all eyes were on VanEck’s application. Despite the pessimism around Gensler’s comments, Bitcoin (BTC) enthusiasts hoped for a change of heart after two U.S. Congressmen, Tom Emmer (MN-06) and Darren Soto (FL-09), wrote to SEC Chairman Gensler.

In the letter written earlier this month, the two Congressmen pushed for approval of a spot Bitcoin (BTC) exchange-traded fund (ETF) in the US.

However, now that the verdict is out, it can push Bitcoin (BTC) prices down further. The markets opened Friday with BTC trading just above the $65,000 mark. However, as the day progressed, the world’s largest currency dipped, at one point falling below $63,000. 

In the past two days, Bitcoin has shed over about 9%. It currently trades just above $64,000. 

As the news garners stream, we will see what impact it will have on the markets today.