- The SEC rejected the spot Bitcoin application from Skybridge giving a plethora of reasons for their decision.
- The regulator had previously delayed giving a decision for the application that was first filed in May 2021.
- Despite the rejection, analysts remain bullish that a pure-play Bitcoin ETF is around the corner.
The SEC remains a stumbling block for the grant of a spot Bitcoin ETF after the latest rejection of Skybridge’s application. The regulator gives a range of reasons for the rejection slammed against the application.
After months of postponing the making of a decision, the US Securities and Exchange Commission gave its verdict on the application of a spot Bitcoin ETF. The rejection of the application was not what cryptocurrency analysts might have hoped for but the Commission stands resolute behind the decision.
The SEC in a statement gave the order of disapproval on a “proposed rule change to list and trade shares of the First Trust SkyBridge ETF Trust under the NYSE Arca rule.” According to the statement, the SEC argues that a rule change will not be in the best interest of investors and the general public, and are not “designed to prevent fraudulent and manipulative acts and practices.”
The Commission claims that the requirements for listing a financial project have not been met, particularly the requirement for the “comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference Bitcoin asset.”
The reasons for the rejection of the application were similar to the rejections of the VanEck’s and WisdomTree applications in November and December respectively. SEC Chair Gary Gensler famously noted that the SEC will be tilting favorably to only futures-based ETFs as a means of protecting investors. In line with this, the Commission went on to approve the first Bitcoin ETF in September to critical acclaim.
Investors Still Remain Optimistic
Despite the rejections, several analysts are brimming with confidence that approval for a spot Bitcoin ETF is around the corner. The hearing for Grayscale and Bitwise applications in February could be the turning point for the SEC. Investors are citing the successes of the futures-based Bitcoin ETF as proof that the spot ETF would succeed.
A group of US congressmen including Tom Emmer penned a carefully worded letter to Gensler to demand approval of spot Bitcoin ETFs. Their letter contained a plethora of reasons why approval should be given with capital outflows out of the country as a potential reason.
Other countries are not waiting for America’s cue and have gone ahead to launch their Bitcoin ETFs with relative success. Australian Securities and Investment Commission (ASIC) gave the green light to spot ETFs for both Bitcoin and Ethereum while Fidelity Investment has set up shop in Canada. Investors are hopeful that the successes of the ETFs in these jurisdictions could trigger the SEC to grant a swift application in the coming weeks.