Sorry bitcoin ETF hopefuls. The last application for an exchange-traded fund tied to the cryptocurrency has been denied by the Securities and Exchange Commission, according to document on the agency’s website.
Bitwise’s Bitcoin ETF Trust would have tracked the spot price for bitcoin if it had been approved. It was originally filed with the agency on January 28, and then in March, the commission granted a longer period to consider the new product. The denial of the fund follows the denial of VanEck’s similar bitcoin ETF last month.
Companies, including the likes of Winklevoss Capital and Realty Shares, have tried to get an ETF tied to the crypto market off the ground, but regulators have pushed back on such a fund because of concerns about manipulation. Bitwise has tried to mollify the concerns of the agency by pointing out the marketplaces in crypto with legitimate volumes. But the SEC said the firm doesn’t explain how legitimate exchanges are isolated from exchanges cooking their own order books.
“Because, among other things, the Sponsor has asserted that 95% of the bitcoin spot market consists of fake and non-economic activity, but has not established that it has, in fact, identified the “real” bitcoin market, or that the “real” bitcoin market is isolated from the fraudulent and manipulative activity, we find, in each case, that NYSE Arca has not met its burden to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and therefore the Commission disapproves this proposed rule change.”