SEC Turns Down New Spot BTC ETF From Fidelity

Table of Contents

• Cboe’s Rule Change Request Rejected
• Spot ETFs Rejected Over Futures ETFs
• SEC Still Against BTC Spot Trading Funds

The United States Securities and Exchanges Commission (SEC) has rejected yet another spot Bitcoin exchange-traded fund (ETF), this time from investment giant Fidelity. 

Cboe’s Rule Change Request Rejected

The Cboe BZX Exchange had proposed a rule change that would allow it to list and trade shares of Fidelity’s Wise Origin BTC Trust. However, the SEC did not approve the rule change, citing that it would not be conducive to its own attempts of protecting investors from fraud and manipulative practices. 

In a recently released filing, the SEC clarifies further on its decision to reject the proposal, 

"This order disapproves the proposed rule change. The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and in particular, the requirement that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”

Spot ETFs Rejected Over Futures ETFs

The rejection further emphasizes the precedent set by the SEC that it is not approving spot BTC ETFs. In fact, the only ETFs that track BTC futures have received the green light from the SEC are the ones that track BTC futures. So far, one of the few BTC ETFs to be approved by the SEC was the ProShares Short Bitcoin Futures Strategy ETF in October 2021. It was followed soon by the Valkyrie BTC Strategy ETF. 

Commenting on the rejection, a spokesperson from Fidelity noted, 

"While we are disappointed by the outcome of the SEC’s deliberations resulting in today’s disapproval order, we reaffirm our belief in market readiness for a physical bitcoin exchange-traded product and look forward to continued constructive dialogue with the SEC."

SEC Still Against BTC Spot Trading Funds

A similar roadblock was put up by the SEC in November 2021, when the Cboe BZX Exchange filed an application to implement a rule change that would enable it to list the VanEck Bitcoin ETF. The SEC gave similar reasoning back then as well, claiming that the exchange had not provided enough evidence that it will be taking necessary measures to protect the public interest while preventing fraudulent activities. Both VanEck and Cboe have been locked in a decade-long battle with the SEC to bring the first Bitcoin ETF to the US to track BTCs directly. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.