Bitwise’s Bitcoin ETF Proposal Rejected by the SEC

The United States Securities and Exchange Commission (SEC) has rejected yet another attempt at a Bitcoin exchange-traded fund (ETF), the agency announced on 9 October.

According to the Wednesday statement, the ETF proposal filed by Bitwise Asset Management and NYSE Arca did not meet the legal requirements, and thus was rejected.

The regulator stated that NYSE Arca, in particular, did not meet the necessary requirements to prevent market manipulation or other illicit activities.

The SEC order reads:

“The Commission is disapproving this proposed rule change because, as discussed below, NYSE Arca has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices.'”

The ETF proposal was originally filed on 28 January, but due to the government shutdown, the SEC published it in the Federal Register on 15 February.

Bitwise was attempting to be the first firm to launch an ETF in the U.S., and claimed that their proposal was different from previous such efforts, as a regulated third party custodian would store the bitcoins.

Their competitor VanEck also filed a similar proposal alongside SolidX in January, but last month withdrew it after the SEC delayed its decision on the proposal a number of times.

To date, all ETF proposals have been rejected by the SEC over market manipulation and fraudulent activity concerns.

Currently there is only one ETF proposal awaiting a decision from the regulator, filed by Wilshire Phoenix and NYSE Arca, but seeing how Bitwise’s proposal was rejected because of NYSE Arca, it is expected the same thing will happen again.