After several delays, the United States Securities and Exchange Commission (SEC) has officially disapproved First Trust SkyBridge’s application for a spot Bitcoin exchange-traded funds.
The SEC filed a Thursday rejection of a proposal from the New York Stock Exchange (NYSE), Arca to list and trade shares in the First Trust SkyBridge Bitcoin ETF Trust. SEC stated that any rule change to approve the ETF would not “‘protect investors and protect the public interest” nor prevent fraud and manipulation.
SkyBridge applied to list a Bitcoin ETF at the NYSE in March 2021. Before reaching its decision on Thursday, the SEC had twice given the ETF a longer time period to approve or reject the proposed rule changes in July and November.
The SEC rejected the NYSE’s application for listing a financial product. This was based on its rules of practice and the Exchange Act. These restrictions require that exchanges seeking to list a BTC ETF must have a “comprehensive surveillance-sharing arrangement with a regulated marketplace of significant size” regarding the reference or underlying Bitcoin assets.
The NYSE Arca used a $10m market order example to show that selling large amounts Bitcoin (BTC), would have a “significant market impact.” It also pointed to Tesla’s $1.5billion BTC purchase in February to illustrate the need to gain exposure to crypto via the company’s shares.
These claims were rejected by the commission, who cited similar reasons for disapproval of Bitcoin spot ETFs from VanEck (asset manager) in November and WisdomTree (December). The SEC has yet to approve any ETF that has direct exposure to crypto, but it has approved offerings linked to BTC futures.
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Separate decisions for Bitcoin ETF applications from the New York Digital Investment Group (NYDIG) are expected to be made by March 16. After being delayed on Saturday, the application is still under review.