SEC Rejects Wisdom Tree’s Spot Bitcoin ETF Application

 Commentary  December 03, 2021 at 07:44 AM  Share & Print

What You Need to Know

  • It was the agency’s second Bitcoin ETF rejection in a month. Fidelity Canada launched its first spot Bitcoin ETF.
  • Meanwhile Fidelity Canada launched its first spot Bitcoin ETF in Toronto, denominated in Canadian and U.S. dollars.nto
  • Kryptoin’s spot ETF application is the next spot Bitcoin ETF up for a final decision from the SEC.

Two down, probably more to come.

The Securities and Exchange Commission has denied the second Bitcoin ETF in its latest round of applications, the WisdomTree Bitcoin Trust, which is among a dozen or so Bitcoin ETF applications pending at the agency.

In a 53-page letter dated Dec. 1, the commission rejected the Cboe BZX’s rule changes to trade the WisdomTree ETF because the proposal did not meet the requirements “to prevent fraudulent and manipulative acts and practices and “to protect investors and the public interest.”

The rejection letter enumerated multiple reasons for the SEC’s decision, including a lack of data provided to support its assertions that the Bitcoin market is inherently resistant to fraud and manipulation and a lack of means to to prevent fraudulent and manipulative acts and practices if it dispensed with a requisite surveillance-sharing agreement.

The SEC rejected the exchange’s assertions that the growth of liquidity in the spot Bitcoin market and certain features of the reference rate for Bitcoin, which aggregates the trade flow of several spot Bitcoin platforms, mitigates potential manipulation concerns.

The SEC rejection of the WisdomTree Bitcoin Trust comes about three weeks after the agency rejected VanEck’s spot Bitcoin ETF proposal. Next on the docket is Kryptoin’s spot Bitcoin application, which is likely to face a similar fate just before Christmas. Around the same time, the SEC could issue its first opinion on Grayscale’s application to convert its Bitcoin trust to a Bitcoin ETF.

The Wisdom Tree Bitcoin ETF rejection, like VanEck’s, comes after multiple SEC postponements during which time the SEC sought comments on the proposal.

Fidelity Canada Launches Spot Bitcoin ETF

While there are no spot Bitcoin ETFs trading in the U.S., there are several trading in Canada, including the latest to launch, the Fidelity Advantage Bitcoin ETF. It was introduced on Thursday at the Toronto Stock Exchange along with a mutual fund that invests in the ETF and is called the Fidelity Advantage ETF Fund.

The funds have the tickers FBTC, denominated in Canadian dollars, and FBTC.U, denominated in U.S. dollars.

U.S. retail customers will be able to purchase the Canadian Bitcoin ETF if they are set up for international trading, according to a spokesperson for Fidelity’s U.S. operations.


European Compliance Association

European Compliance Association

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