SEC Rejects Two Spot Bitcoin ETF Proposals, Rejects the Crypto Industry

The US Securities and Exchange Commission said on Wednesday that offers from Valkyrie Investments and Kryptoin failed to meet requirements to prevent fraudulent and manipulative practices that are necessary to protect investors. This allowed the introduction of futures-backed bitcoin ETFs in October. The SEC’s earlier-than-expected decision may suggest that a 2022 approval for a pure bitcoin fund may not be in the cards.

The deadline for deciding on the two fund proposals was January 7, according to Bloomberg Intelligence analyst Eric Balchunas, who prefers the initial order as a “scrooge-ejection.”

The decision came nearly a month after the agency rejected VanEck’s application for a spot bitcoin ETF.

“The fact that the SEC is disapproving faster than necessary — we were optimistic about the futures, but we don’t have confidence in the 2022 approval,” Balchunas said.

Launching the first spot-bitcoin ETF remains the holy grail for investment fund providers, who view such products as an entry into crypto for millions of individual investors. The first bitcoin futures ETF, ProShares Bitcoin Strategy, attracted nearly $1 billion in influx of investors shortly after its launch.

The SEC’s decision on First Trust/Skybridge’s proposed spot-bitcoin ETF is expected on January 22, followed by a decision by Fidelity on January 27. Approval seems unlikely, according to Bloomberg Intelligence analyst James Seifert, who poked fun at the SEC as a Grim Reaper knocking on the doors of the First Trust and Skybridge.

According to data from Bloomberg Intelligence, the number of crypto-tracking investment vehicles worldwide has more than doubled to 80 at the end of 2020. Wealth increased to $63 billion from $24 billion at the start of the year.

This story has been published without modification in text from a wire agency feed. Only the title has been changed.