The SEC Rejected VanEck’s Spot Market BTC ETF Application

The SEC rejected VanEck’s spot market BTC ETF application from entering the market following a series of delays as we are reading more in our latest cryptocurrency news today.

The SEC rejected VanEck’s spot market BTC ETF application that was aimed at tracking the price of Bitcoin. In the ruling, the SEC again cited concerns that the BTC spot market is prone to fraud and manipulation and up to this date, it has only allowed BTC ETFs linked to futures that bet on the future price of BTC and are regulated by the CFTC.

The New York-based asset management company already applied back in 2020 for an ETF and faced frequent delays from the regulator. In rejecting the application today, the SEC noted that VanEck didn’t really satisfy the concerns that the Commission previously articulated about the market:

“Listing exchanges have also attempted to demonstrate that other means besides surveillance-sharing agreements will be sufficient to prevent fraudulent and manipulative acts and practices, including that the Bitcoin market as a whole or the relevant underlying Bitcoin market is ‘uniquely’ and ‘inherently’ resistant to fraud and manipulation. No listing exchange has satisfied its burden to make such demonstration.”

An ETF is an investment tool that allows investors to purchase shares that represent an underlying asset. Real estate, gold, and foreign currency ETFs are quite popular in the US so a Bitcoin ETF would therefore allow the investors to gain more exposure to BTC without the hassle of purchasing the crypto from exchanges and storing it in the crypto wallet which remains complex for most retail investors. Over the years, the SEC turned away plenty of applications for a spot-based bitcoin ETF as one of which was the crypto itself as its base but it did previously approve several Bitcoin futures ETFs following a sudden rush of applications after the SEC chair hinted back in the summer that the Commission will be inclined to approve these products.

The futures ETFs have been quite popular as we saw with ProShare’s Bitcoin Strategy ETF that traded about $1 billion in shares on its debut when it kicked off on the New York Stock Exchange a month ago. VanEck has a Bitcoin futures ETF on the market. There’s a long list of hopeful companies like VanEck that say that the market will be better off with a spot-based product as the director of digital asset strategies Gabor Gurbacs at VanEck, said that a physical exposure Bitcoin ETF is much more efficient than the futures-based fund structures and argued that a spot-based product will be cheaper for both the issuers and the investors.

Congressmen Tom Emmer and Darren Sotto sent a letter to the SEC chair and made their case for a spot-market ETF while Grayscale CEO Michael Sonnenshein echoed the same sentiment and suggested that the approval for a real ETF became a political issue. Despite the success of Bitcoin futures ETF products, VanEck’s rejection could mean that the US will not get a real ETF anytime soon.