The Securities and Exchange Commission (SEC) has once again stonewalled the launch of a Bitcoin spot ETF in the United States.
On Tuesday, the commission released an order rejecting Cboe BZX Exchange’s latest application for the product, on grounds similar to those cited in multiple applications before it.
“The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice,” read the filing.
Specifically, the SEC ruled that the exchange hasn’t demonstrated that its WisdomTree Bitcoin Trust would be “designed to prevent fraudulent and manipulative acts and practices” while protecting investors and public interest.
The decision follows two delays on the company’s application decision in March and August, and the denial of a former application from WisdomTree in December on the exact same grounds.
The SEC has approved multiple Bitcoin futures ETFs since last October, but is yet to approve a Bitcoin spot ETF. The former product type is backed by cash-settled futures contracts which bet on Bitcoin’s future price. By contrast, the latter tracks the price of actual Bitcoin held by the ETF provider.
The commission’s refusal to accept a spot ETF within U.S. markets consistently comes back to one problem: the lack of a sufficiently regulated Bitcoin spot market within the country.
“An exchange that lists bitcoin-based ETPs can meet its obligations… by demonstrating that the exchange has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets,” explained the SEC’s order.
Grayscale—the world’s largest Bitcoin fund—received a similar explanation in May after the commission rejected its lengthy appeal to convert its fund into a spot ETF. CEO Michael Sonnhenshein suspected foul play, however, and decided to pursue a lawsuit against the SEC.
"The SEC is failing to apply consistent treatment to similar investment vehicles, and is therefore acting arbitrarily and capriciously in violation of the Administrative Procedure Act and Securities Exchange Act of 1934," Grayscale’s legal counsel said at the time.
Other countries such as Canada and Australia have already approved multiple spot ETFs for both Bitcoin and Ethereum.