The SEC continues to reject the possibility of authorizing a spot Bitcoin ETF.
The U.S. Securities and Exchange Commission (SEC) has deemed applications filed by BlackRock and other asset management firms recently to create a Bitcoin spot ETF to be insufficient and lacking clear details. reported The Wall Street Journal, citing sources familiar with the matter.
The US securities regulator's concerns reportedly continue to revolve around the potential risks posed to investors by the cryptoasset market, such as market manipulation, volatility and liquidity.
SEC slams Bitcoin ETF applications from BlackRock, Fidelity and others
According to sources close to the SEC, applications for a Bitcoin ETF received by the regulator were rated as “inadequate” as they lack clear details and complete information.
BlackRock, the world's largest asset manager, filed a filing with the SEC a few weeks ago seeking approval to register a Bitcoin spot ETF in the US market. In the filing, the company proposed to the securities regulator to establish a “shared surveillance” agreement that would allow for increased transparency to mitigate the risk of market manipulation related to Bitcoin. However, despite complying with due diligence and presenting a more attractive strategy to the securities regulator, according to several analysts, the SEC has commented that the information contained in BlackRock’s ETF filing is insufficient. Specifically, BlackRock’s filing does not include the name of the company with which it would share market surveillance, the sources indicated.
The SEC’s rejection of Bitcoin spot ETF applications also extends to Fidelity Investments’. According to sources close to the regulator, the SEC is asking asset managers for more clarity.
In recent weeks, the US securities regulator has also received applications for Bitcoin ETFs from companies including Ark Investment, Invesco, WisdomTree, Bitwise Asset Management and Valkyrie.
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Crypto community remains hopeful that SEC will approve a Bitcoin spot ETF
Although the SEC appears reluctant to approve a Bitcoin spot ETF, some analysts sense a possible change of heart from the regulator.
Indiana University finance professor Vivian Fang believes the SEC's current stance could indicate the regulator is mulling approving a Bitcoin exchange-traded fund, an investment vehicle that could provide regulated access to the cryptocurrency for investors and institutions.
According to The Block, Fang highlighted that the SEC has not simply rejected the ETF applications submitted by BlackRock, Fidelity Investments and the other companies, but has instead directed the companies to work on their applications. “It basically threw it back and said, work on the application and there is a chance this will be approved,” Fang said.
The Indiana finance professor also said that BlackRock's track record and strong reputation as a global asset manager could be very attractive to the SEC. The SEC would likely want this in order to approve a Bitcoin spot ETF, she said.
In response to the SEC's requests for clarity, firms including Invesco, VanEck, and WisdomTree have updated their SEC filings, mirroring BlackRock's proposed settlement and including Coinbase in their surveillance-sharing arrangements.
Patrick McHenry thinks about cryptocurrency innovation
The SEC and its chairman, Gary Gensler, have been the subject of numerous critical for enforcement actions taken against companies in the crypto industry and for the continued refusal to approve a Bitcoin spot ETF. Companies like Binance and Coinbase were sued by the SEC last month for allegedly offering and trading unregistered securities.
Because of this, organizations such as the Blockchain Association have criticized Gensler's management, indicating that the regulator has only been hindering innovation and driving it out of the country.
Also, Patrick McHenry, chairman of the House Financial Services Committee, spoke out against Gensler, saying he would keep a close eye on the regulator to see how it responds to Bitcoin ETF applications filed by several of the world's largest asset managers.
McHenry suggested that if BlackRock's ETF application receives SEC approval, Gensler would have a lot of explaining to do.
The US lawmaker also commented that the only reason Gensler has for opposing the creation of a Bitcoin ETF in the country “is if he wants to kill cryptocurrencies in the United States.”
To date, the SEC has not issued a formal response to the current Bitcoin ETF applications.
Continue reading: Grayscale sues SEC over Bitcoin Spot ETF rejection
