By On 9th October 2019, the United States Securities and Exchange Commission (SEC) stated that they have rejected the Bitcoin (BTC) exchange-traded funds (ETF) filed by Bitwise Asset Management and NYSE Arca.
The SEC Order document claimed that the Bitwise ETF proposal did not meet the necessary requirements in relation to market manipulation possibilities and illegal activities.
SEC’s announcement comes only two days after Bitwise’s Managing Director and Global Head of Research Matt Hougan, commented in a video interview with CNBC on the approval status of the ETF. He said that Bitwise was closer than ever to getting the BTC ETF approved.
SEC States Reason for Rejecting Bitwise EFT
Bitwise filed the initial application for a rule change to U.S securities laws in January 2019, and has been pushing the SEC to respond for months. SEC stated their reason for this rejection as:
“The commission is disapproving this proposed rule of 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 the 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.”
Bitwise Positive Response to SEC’s Rejection
Matt Hougan was optimistic that SEC would approve their application because of the tremendous growth of the crypto world in recent years:
“Two years ago, there were no regulated insured custodians in the Bitcoin market. Today, there are big names like Fidelity and Coinbase with hundreds of millions of dollars of insurance from firms like Lloyds of London.”
Bitwise did not take long to react to SEC’s decision. On 10 October 2019, Matt Hougan said that Bitwise intends to re-file the case and will do so as soon as possible. He added:
“We deeply appreciate the SEC’s full review. The detailed feedback they have provided in the Order provides critical context and a clear pathway for ETF applicants to continue moving forward on efforts to list a Bitcoin ETF.”
Bitwise concluded by recognizing that historically, the process of approving a novel exchange that brings about new asset classes is not easy and “what matters is the continued progress and the investment of time form regulators and that’s what we see here.”
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