The final application for an exchange-traded fund (ETF) tied to the cryptocurrency has been denied by the US Securities and Exchange Commission (SEC), according to a document on the agency’s website
Bitwise’s Bitcoin ETF Trust would have tracked the spot price for bitcoin had it been approved.
Out of many already filed and rejected, there is one last ETF hopeful left and rejecting that one could put Bitcoin in a price tailspin.
Bitwise’s ETF Trust was originally filed with the SEC on Jan. 28 and its denial follows the rejection 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 because of concerns about manipulation,” said the BlockCrypto.
“Bitwise has tried to mollify the agency’s concerns 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 order books.”
Here is text from the SEC finding from more than 100-page rejection letter:
“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.”
“The Commission concludes that claims by the Sponsor and a commenter that the “real” spot bitcoin market is organized, efficient, resilient, or robust, or has tight spreads, do not suffice to distinguish the proposed ETP from other derivative securities products.”
The Commission also took exception to the absence of surveillance-sharing agreements among crypto players.
Recent efforts by industry players to form self-regulatory associations for sharing best practices have largely been exclusive and restricted to a limited number of participants. For example, the Virtual Commodity Association from the Winklevoss-brothers backed Gemini does not include North America’s biggest cryptocurrency exchange Coinbase.
This news guarantees that a bitcoin ETF won’t trade on a regulated U.S. equities exchange in 2019.
To date, the SEC has rejected all bitcoin ETF proposals, citing market manipulation and fraudulent activity concerns.
With Wednesday’s rejection, the SEC only has one bitcoin ETF proposal currently sitting before it, filed by Wilshire Phoenix and NYSE Arca.
BTC hasn’t been affected by this decision.
Rather, Bitcoin and ethereum, the two biggest cryptocurrencies by market value, suddenly soared yesterday despite the U.S. Securities and Exchange Commission (SEC) rejecting the latest attempt at creating a bitcoin exchange-traded fund (ETF).
The bitcoin price is up some 5% over the last 24-hour trading period, while ethereum has risen by over 6%, both adding to gains earlier in the week.
Bitcoin was at $8637 at publishing time and Ethereum was at $193.29.
But, in late September, Bitcoin’s price tumbled off a cliff, as it shed 20% of its value in three days’ time. Jake Chervinsky, the general counsel for Ethereum DeFi application Compound, issued the below tweet to convey this point.