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SEC Rejects VanEck Bitcoin ETF Application

The SEC had delayed a decision on this application twice before filing a request for public consultation over concerns about market manipulation.

The U.S. Securities and Exchange Commission on Friday rejected a proposal to list the country's first bitcoin exchange traded fund, VanEck Bitcoin ETF, because it did not meet trading standards “designed to prevent fraudulent and manipulative acts and practices," the SEC said in a filing.

The SEC order "disapproves the proposed rule change" filed by Cboe BZX Exchange on Mar. 21. VanEck filed its ETF proposal at the end of 2020, with Cboe BZX agreeing to act as VanEck’s exchange partner earlier this year.

The SEC had delayed a decision on this application twice before filing a request for public consultation over concerns about market manipulation.

Typically, "these applications are reviewed within 45-day windows and the agency can take up to 240 days to make a decision," Reuters reported.

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The markets regulator in its note added that Bitcoin ETFs need to show a "comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets," in order to get clearance for trading.

Surveillance-sharing agreements provide the sharing of information about market trading activity, clearing activity, and customer identity and access to produce requested information by third parties.

In the past, SEC Chair Gary 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.