Cryptocurrency analysts said they were not surprised by the U.S. Securities and Exchange Commission's decision to reject a proposal to list VanEck Bitcoin ETF, the country's first bitcoin exchange traded fund.
The SEC said in a filing that the proposal did not meet trading standards “designed to prevent fraudulent and manipulative acts and practices."
"The SEC’s decision to deny the application for the VanEck Bitcoin ETF is not a surprise, given comments by SEC Chair Gary Gensler in recent months," Christopher Vecchio, senior strategist at DailyFX.
Gensler, has indicated that the SEC would be reluctant to expand crypto offerings, particularly a “spot” bitcoin ETF unless there is legislation clearly defining which regulatory agencies have control over the various crypto spaces, such as crypto exchanges," CNBC reported.
"Like with other spot Bitcoin ETFs in the past, including the Winklevoss’ application in 2013, the SEC thinks the lack of a surveillance-sharing agreement means fraud and manipulation can still endanger the broader investing public," Vecchio said.
Bitwise Asset Management withdrew its Bitcoin futures ETF application earlier this week due to a lack of available front-month contracts.
Vecchio said that in the wake of Bitwise's actions, "it may be some time before the SEC approves any new Bitcoin ETPs, a discouraging development that undercuts weeks of positive news about potential widespread adoption."
Micah Carnahan, crypto expert with Finder, said "the decision remains consistent with past SEC policy."
"VanEck would need to show further commitments to fraud prevention for the SEC to allow it," Carnahan said. "Nevertheless, many believe this decision only delays an inescapable future outcome."
Zak Killermann, Finder's Fintech and crypto expert the SEC has remained consistent with previous rulings "and in doing so, will prevent VanEck from launching an ETF directly connected to the spot price of BTC."
"This ruling means that retail and institutional investors who want to dip their feet directly into the spot price of BTC will still have to rely on crypto-specific exchanges and OTC services," Killermann said, "instead of navigating the crypto market via traditional brokers as many had hoped."
While buying bitcoin can seem intimidating, Killerman said retail and institutional investors should seek to educate themselves on the overall crypto market.
The first U.S. bitcoin futures-based exchange-traded fund, the ProShare's Bitcoin Strategy ETF, began trading last month and has since accumulated more than $1.4 billion worth of assets under management, according to Cointelegraph.