Bitcoin

US regulators ban ‘seminal’ bitcoin innovation

The US Securities and Exchange Commission (SEC) has rejected a first-of-its kind exchange-traded fund (ETF) for bitcoin.

The VanEck Bitcoin ETF, which has been under review for more than seven months, could have supercharged the price of the digital currency.

“This order disapproves the proposed rule change. The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice … in particular, the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest’”, the SEC said.

AN ETF could have allowed institutional investors to buy crypto through easily accessible vehicles, but it was not certain to pass.

One senior ETF analyst at Bloomberg estimated the odds of the SEC approving the ETF were “prob like 200-1.”

It is possible that this rejection could reverse the market’s momentum, but it may not be for long. There are other ETFs under consideration, including one from crypto lender BlockFi and investment management firm Neuberger Berman.

“Optimism is growing in the market,” crypto Luno argued in a research note published last week. “A VanEck rejection does not necessarily imply that these other filings will receive the same verdict.”

However, the SEC has been more open to bitcoin futures exchange-traded fund – with one launching in the US last month and was touted as a major milestone for the crypto industry.

“A bitcoin ETF will provide even more exposure to bitcoin for those who are perhaps wary of buying it directly from an exchange,” Matt Senter, chief technology officer of bitcoin rewards app Lolli, told The Independent at the time.

“By allowing individuals to invest in bitcoin through ETFs that track its underlying value, investors can become familiar with bitcoin while fielding aspects of the ownership experience that may be daunting to crypto novices, such as navigating exchanges, wallets and private keys.”

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