The Securities and Exchange Commission (SEC) of the United States has dismissed a proposal filed by Bitwise to create a Bitcoin (BTC) exchange-traded fund (ETF).
The SEC made the announcement on Oct.9. It stated that the proposal filed by NYSE Arca and Bitwise Asset Management didn’t meet the essential legal requirements to counter market manipulation and other illegal activities.
Nothing Approved from ETF to Date
The Commission hasn’t approved any proposals regarding bitcoin ETF to date. The organization has always cited concerns regarding fraudulent activities and market manipulation.
The SEC has seemingly put the rejection on the shoulders on Arca. In its ruling, the Commission stated that it has disapproved the proposed rule amended as NYSE Arca hasn’t met its burden as required by the SEC’s Rules of Practice. Specifically, it failed to show that its proposal is compatible with the conditions set in the Exchange Act Section 6(b)(5). The SEC took special note of the requirement that the policies of a national securities exchange are developed to block manipulative and fraudulent practices and acts.
Bitwise and NYSE Arca filed its first ETF proposal in January 2019 as part of its latest campaign to provide its retail customers with a regulated bitcoin product. Bitwise wanted to be the first company to introduce an ETF in the United States.
Its rival, VanEck, also submitted a similar proposal around the same time. However, the company has since pulled out its proposal.
The SEC’s decision was quite a blow to Bitwise, especially as its managing director Matt Hougan told CNBC a few days earlier that they’re closer than ever before to “getting a Bitcoin ETF approved.”
Matt Hougan on the Topic
Hougan was very confident about Bitwise securing approval for a physically secured BTC ETF when he talked to the network on Oct. 7. He called attention to the impressive growth that the cryptocurrency niche generated these past few years.
Hougan, who’s also the global research chief at Bitwise, said that there were no insured or regulated custodians in the crypto market two years ago. But now there are major companies like CoinBase and Fidelity that carry millions worth of insurance from reputable firms like Lloyd’s of London.
Despite the setback, the Bitwise Asset Management group and NYSE Arca are set to file another application again. The two companies confirmed the decision through a recently published press statement.
In its statement, Bitwise stated that they appreciated the SEC’s “careful review” and said the feedback they received provided context and a clear path forward. The company added that it was looking forward to resolving the SEC’s concerns and to re-filing its application.