In recent Bitcoin News, The U.S. Securities and Exchange Commission (SEC) has once again rejected WisdomTree’s application for a spot bitcoin ETF, saying it does not have sufficient investor protections. This comes after the SEC rejected Grayscale’s application to convert its GBTC into a bitcoin spot ETF and Bitwise’s Bitcoin ETP Trust application.
WisdomTree Was Previously Rejected By The SEC Last Year
This is reportedly the second time the New York-based asset manager’s application for a Bitcoin spot ETF has been rejected.
On December 1, 2021, the SEC formally rejected WisdomTree’s proposal for a Bitcoin spot ETF. WisdomTree, which has more than $75.17 billion in assets under management, was to list a Bitcoin spot ETF before being rejected by the SEC, citing “market manipulation and consumer protection concerns.”
The ETF was first proposed by Wisdom Tree in March of last year, and the Chicago Board Options Exchange (CBOE) applied to list it on the BZX exchange. The SEC decided to open public comments in April and postponed deliberation until September.
In its denial letter, the SEC stated that BZX was unable to demonstrate that the ETF had satisfied the financial product listing requirements and that the application contained only BZX’s security statement without any evidence or analysis to support it; making it impossible for the SEC to conclude that WisdomTree’s Bitcoin spot ETF had satisfied the Exchange Act and the Commission’s Rules of Practice and did not clearly protect investors and the public interest. Because of the ruling, the Bitcoin exchange-traded fund was therefore denied. In the filing, the regulator stated that the ETF had not presented evidence that it was “designed to prevent fraudulent and manipulative acts and practices.”
SEC Previously Rejected Another Bitcoin ETF
The WisdomTree Bitcoin ETF rejection was not the first time the SEC booted a crypto ETF. The first ETF to fall was a Bitcoin spot ETF applied for by ETF provider VanEck, which was also listed on CBOE’s BZX exchange. The SEC rejected it after claiming that the spot ETF did not meet the basic conditions of the Exchange Act and the Commission’s Rules of Practice, such as “protection against fraud and manipulation” and “protection of investors and the public interest.
Grayscale GBTC, which is seeking to transform itself into a BTC cash ETF, has chosen to adopt a public relations strategy. Michael Sonnenshein, CEO of Grayscale, has repeatedly criticized the SEC’s move to ban cash through futures in public as a double standard.
Sonnenshein argued that while those who invest in cryptocurrencies already know the risks, the SEC has politicized the ETF application by repeatedly emphasizing that volatility could endanger investors rather than addressing whether a spot ETF can protect investors and market discussions.
Greyscale also wrote a letter to the SEC stating that the agency’s decision was “arbitrary and capricious,” and that the SEC had repeatedly invoked the 1940 Act to reject the Bitcoin Spot ETF, which is akin to taking the sword of the Ming Dynasty and cutting off the officials of the Qing Dynasty for the sake of rejection.