SEC rejects WisdomTree’s application for spot Bitcoin ETF

After deferring several times this year, the United States Securities and Exchange Commission (SEC) has officially disapproved WisdomTrees spot Bitcoin exchange-traded funds (ETF).

A Wednesday filing shows that the SEC has rejected a rule change proposed by the Cboe BZX Exchange for WisdomTrees Bitcoin Trust to list and trade shares. The SEC stated that any rule change to approve the ETF would not “protect investors and protect the public interest” or “prevent fraudulent and manipulative acts and practice”.

The SEC found that BZX did not meet the requirements for listing a financial product. According to the Exchange Act, the BTC ETF proposal would not permit the commission to “detect, investigate, or deter fraud and market manipulation as well as violations by federal securities laws and regulations.” Furthermore, the SEC stated that the exchange had not provided enough means to “prevent fraudulent and manipulative acts, practices, or actions” in any possible listing.

The agency claimed that BZX didnt provide sufficient data to conclude that the crypto market is stable to manipulation or address concerns about potential sources of fraud and manipulation such as wash trading. The exchange used examples from crypto futures products that were offered by the CME Group to support its argument for approval. However, the SEC rejected these as evidence in favor of a spot crypto ETF.

The filing stated that the Commission could not conclude that the ETP trading would have a dominant influence on the prices of the CME bitcoin futures markets based solely on BZX’s statements. There was no evidence or analysis to support BZX’s assertions.

Related: Grayscale informs the SEC that there is no basis to approve Bitcoin futures ETFs, but spot ETFs.

The SEC first filed the application for its spot Bitcoin ETF on March 26. 26. WisdomTree has had the commission delay several times in 2021 a decision on its spot Bitcoin ETF. In April, the SEC made the application available for public comment and gave longer periods of time to approve and disapprove the rule change. The reasoning behind WisdomTrees denial was the same as that used by VanEck to reject VanEck’s Bitcoin ETF in November.

WisdomTree, however, was able to list the crypto basket-traded product it listed on Euronext in Paris and Amsterdam. The ticker MEGA is used to trade the investment product. It includes physical crypto assets such as Bitcoin (BTC), Ether (ETH), and Ether (ETH).

The separate ETF application for WisdomTree’s Ethereum Trust in America, submitted in May to the SEC, is still being reviewed. The agency is expected to make a decision about an exchange-traded fund that offers exposure to Bitcoin from Kryptocoin. This deadline is set for Dec. 24.