Digital Assets: The SEC Turns Down VanEck’s Application For A Spot Bitcoin ETF
However, the SEC approved a bitcoin ETF last month that invests in futures contracts rather than the underlying cryptocurrency.
On Friday, the SEC gave a thumbs-down signal to a spot bitcoin ETF from VanEck. The regulator told the Cboe BZX exchange that its filing for a proposed rule change to list the VanEck ETF did not meet “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).” (CNBC)
Filed in March of this year, the SEC previously postponed, twice, a decision on the Cboe’s application but was bound to give a decision by November 14, the final deadline.
VanEck and spot bitcoin ETF
The SEC said in its order that BZX fell short of “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.’”
These concerns have remained unaddressed for nearly a decade. Current SEC chair Gary Gensler has made no secret of his preference for a futures (not spot)-based bitcoin ETF. The ProShares Bitcoin Strategy ETF (NYSEARCA: BITO) therefore was the first futures-based bitcoin ETF to launch last month, followed by the Valkyrie Bitcoin Strategy ETF (NASDAQ: BTF).
BITO became the fastest ETF ever to garner more than $1 billion in assets – proof that there was real demand for a bitcoin fund among investors. Though a VanEck application for a futures-based bitcoin ETF has been considered effective since October 23, the fund has not yet listed.
Futures-based ETFs have to periodically rollover the futures contracts that they invest in, but these rollovers cost the fund. These costs do not apply to a spot ETF, making the latter more attractive to investors.
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