In a significant development the SEC has torpedoed two proposals which aimed to offer bitcoin exchange-traded funds, dealing a blow to market participants who had hoped the regulator would have approved the given the deal a green light since it had approved futures-backed bitcoin funds in October.
In a notice the SEC said, the proposals to list and trade shares of Valkyrie Bitcoin Fund and the Kryptoin Bitcoin ETF Trust were not approved since they did not meet its standard.
“(These proposals) do not meet the standard of being designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest,” said the SEC.
In October, the SEC had approved two bitcoin futures-based funds – ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF, which made their Wall Street debuts on the same month.
In November, the SEC had rejected an application to create a spot bitcoin fund from VanEck.
On December 17, the SEC had delayed taking a similar decision on Grayscale Bitcoin Trust.
ETFs are investment tools that track baskets of stocks and have become popular due to their lower fees.
A Bitcoin ETF aims to save the hassle of buying the cryptocurrency from an exchange and manage private keys.
Investor advocates, including Democratic SEC Chair Gary Gensler worry of a lack of regulatory oversight and surveillance on digital currencies, which increases risks of manipulation and fraud.