In Brief:
- The SEC refused The WisdomTree Bitcoin Trust in its most recent round of applications.
- The SEC found that BZX had not met the requirements for listing a financial instrument.
- WisdomTree has also had the SEC postpone since filing its application on March 26th.
The SEC denied a requested rule change from the Cboe BZX Exchange to list and trade shares of WisdomTree’s Bitcoin ETF, according to a Wednesday filing.
After deferring a judgement many times this year, the Securities and Exchange Commission, or SEC, has officially disapproved of asset management WisdomTree’s spot Bitcoin (BTC) exchange-traded fund (ETF).
The SEC stated that any rule change in support of the ETF approval would not be intended to deter fraudulent and deceptive activities and practises, nor would it protect investors and the public interest.
The SEC determined that BZX had not completed the standards for listing a financial instrument under its rules in addition to the Exchange Act. It claimed that the planned BTC ETF would prevent the commission from doing so.
It was further mentioned that, “to obtain information necessary to detect, investigate, and deter fraud and market manipulation, as well as violations of Exchange rules and applicable federal securities laws and rules.”
BZX failed to provide adequate data to decide that the crypto market is resistant to manipulation, according to the agency, or to address concerns about potential sources of fraud and manipulation, such as wash trading and other risk factors.
While the exchange referenced the SEC’s rejection of crypto futures products as rationale for allowing a spot crypto ETF to be admitted, the SEC rejected them as evidence for allowing a spot crypto ETF to be accepted.
The document also mentioned, “the Commission cannot conclude, based on BZX’s statements alone and absent any evidence or analysis in support of BZX’s assertions, that it is unlikely that trading in the ETP would be the predominant influence on prices in the CME bitcoin futures market.”
WisdomTree has had the SEC postpone a judgement on their spot Bitcoin ETF many times since filing its application on March 26. The SEC asked the public to comment on the application in April, and then set longer deadlines for approving or denying the proposed rule change in May, July, and September. It’s reasons for rejecting WisdomTree’s offering were similar to those it used in November to reject VanEck’s Bitcoin ETF.
WisdomTree, on the other hand, was allowed to list its crypto basket exchange-traded product on Euronext’s Paris and Amsterdam exchanges. The MEGA investment product is backed by physical crypto assets such as Bitcoin (BTC) and Ether (ETH) and trades under the ticker MEGA (ETH).
The SEC is still reviewing a second ETF application for WisdomTree’s Ethereum Trust in the United States, which was submitted in May.
