It looks like we won’t be seeing a bitcoin exchange-traded fund (ETF) anytime soon. The latest (and allegedly final) attempt being made by Bitwise has outright been rejected by the Securities and Exchange Commission (SEC), which means there are no more proposals on the table waiting to get a “yes” or “no” vote.
Bitwise Is Out of the Loop
The good news is that this hasn’t harmed bitcoin or Ethereum in the process, the two largest cryptocurrencies by market cap. While other smaller coins have fallen somewhat, i.e. XRP, bitcoin cash and Litecoin, bitcoin and Ethereum are trading for well over $8,500 and $190 respectively.
This is certainly a positive step forward considering the crypto bloodbath that struck the industry two weeks ago. At that time, bitcoin lost more than $1,000 in just a matter of minutes and was trading for just above $8,100 when it had been traversing through $9,500 earlier that morning.
Marcus Swanepoel, chief executive of the London-based crypto exchange Luno, explained in a statement:
The news that the SEC is not going to approve a bitcoin ETF has not impacted the market with bitcoin heading higher again. Overall, global markets are also up, and we are seeing some positive sentiment.
At the same time, it is disappointing to say the least that the SEC is still closed-minded when it comes to new crypto-based trading tools. To an extent, many of us likely believed that the SEC would never approve an ETF for the time being, though it would have been a grand and pleasant surprise to see a reversal of its previous behavior.
An ETF Is Out of the Question
The agency issued the following statement regarding why the Bitwise proposal was rejected:
Because, among other things, [Bitwise and NYSE Arca] have asserted that 95 percent of the bitcoin spot market consists of fake and non-economic activity, but has not established that it has, in fact, identified the ‘real’ bitcoin market, or that the ‘real’ bitcoin market is isolated from fraudulent and manipulative activity, we find, in each case, that NYSE Arca has not met its burden to demonstrate that its proposal is consistent with the requirements… and therefore, the Commission disapproves this proposed rule change.
This marks the umpteenth time the SEC has not viewed the idea of a bitcoin ETF in a positive light, and the space has been marred by incessant rejections. The Winklevoss Twins of the Gemini Exchange in New York, for example, ultimately tried to get a crypto-based ETF approved in 2013, only to receive a rejection slip five years later after a long and arduous fight. VanEck Solid X, on the other hand, decided to pull the plug on its own proposal after two years, clearly feeling that despite its hard work, its proposal would still get the thumbs down.