Rajarshi Mitra
Independent Analyst
- The SEC rejected the ETF application due to concerns regarding market manipulation and a lack of surveillance-sharing agreements.
- So far, the commission has rejected at least nine Bitcoin ETF applications.
New York-based Wilshire Phoenix’s Bitcoin Exchange Traded Fund (ETF) application has been rejected by the US Securities and Exchange Commission. Ongoing issues regarding market manipulation and a lack of surveillance-sharing agreements were cited to be the reasons for rejection. Commissioner Hester Peirce aka “Crypto Mom,” has disputed the rejection publicly.
NYSE Arca had proposed a rule change, permitting the listing and trade of Wilshire Phoenix's United States Bitcoin and Treasury Investment Trust. The proposal, which included Bitcoin and US Treasury Bonds, was expected to address the SEC’s issues about market manipulation by automatically rebalancing into bonds during periods of BTC price volatility.
The SEC noted that the firm was not able to provide enough evidence that it can protect itself from “fraudulent and manipulative acts and practices” in the Bitcoin market “to protect investors and the public interest.” The agency added:
The Commission must disapprove a proposed rule change filed by a national securities exchange if it does not find that the proposed rule change is consistent with the applicable requirements of the Exchange Act — including the requirement under Section 6(b)(5) that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices.
So far, the commission has rejected at least nine Bitcoin ETF applications, including applications from Bitwise Asset Management, VanEck/SolidX and Direxion. Commissioner Peirce stated that the SEC had “once again disapproved of a proposed rule change that would give American investors access to Bitcoin through a product listed and traded on a national securities exchange subject to the commission's regulatory framework."
This line of disapprovals leads me to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for Bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to Bitcoin-related products — and only to Bitcoin-related products.
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