The US Securities and Exchange Commission (SEC) has officially rejected the exchange-traded funds (ETFs) that manage WisdomTrees’ assets after delaying the decision several times this year.
In a filing Wednesday, the Securities and Exchange Commission (SEC) rejected a proposed rule change for the Cboe BZX Exchange to list and trade shares in the Bitcoin Trust WisdomTree. Specifically, the SEC said any rule change in favor of ETF approval would not be “intended to prevent fraudulent and manipulative actions and practices” or “to protect investors and the public interest.”
The SEC concluded that BZX had not complied with the requirements for listing the financial product in the rulebook as well as exchange law, stating that the proposed BTC ETF would not allow the commission “to obtain information necessary for identification, investigation and fraud prevention. Market manipulation, violations of exchange rules and securities laws and regulations.” In addition, the Securities and Exchange Commission said the exchange did not provide adequate means to “prevent fraudulent and manipulative actions and practices” in any potential listing.
In particular, the agency said that BZX has not provided sufficient data to conclude that the cryptocurrency market is counterfeit-resistant, or to address concerns about potential sources of fraud and counterfeiting, including money laundering and other risk factors. While the exchange used a range of examples of futures products with CME Group in its argument for approval, the SEC rejected it as evidence of accepting an ETF in a crypto venue.
“The Commission cannot draw a conclusion based on BZX’s claims alone and without evidence or analysis to support BZX’s claims that ETP trading is unlikely to have a dominant effect on prices in the CME bitcoin futures market,” it said. …
Related: Grayscale Refers to SEC That There Is No Reason to Approval Bitcoin Futures ETFs, Not Spot ETFs
Since the initial filing with the SEC on March 26, WisdomTree has seen the commission delay its decision on the Bitcoin ETF several times in 2021. The SEC opened the application for comment in April and set longer approval or rejection periods. Proposed changes to the rules in May, July and September. The reason for the rejection of WisdomTree’s offer was similar to that of the VanEck Bitcoin ETF, which was rejected in November.
However, WisdomTree was able to list its cryptocurrency product on the Euronext exchanges in Paris and Amsterdam. The investment product, which is traded under the MEGA ticker, is backed by physical cryptocurrencies including Bitcoin (BTC) and Ether (ETH).
A separate ETF file for WisdomTree’s Ethereum Trust in the US, which was first submitted to the SEC in May, is still pending. In addition, the agency is likely to make a decision on an exchange-traded fund that will provide access to Bitcoin from Kryptocoin, with an expected deadline of December 24.