Published
2 years ago on
November 13, 2021
Table of Contents
- Details Of The Applications
- Similar To Previous Rejections
- First Futures-Based Bitcoin ETFs
- An Important Stepping Stone
- ETFs Leaving Competition Behind
The Securities and Exchange Commission (SEC) has announced that it has rejected VanEck’s Bitcoin ETF. The ETF would have directly tracked the price movements of the digital currency. Cboe BZX exchange had filed the application back in March.
However, the SEC stated that not enough was done to protect investors from fraudulent trading.
Details Of The Applications
While filing the application back in March, the Cboe BZX Exchange also wanted the SEC to implement a rule change that would enable it to list the VanEck Bitcoin fund. The ETF would have directly been able to track the currency’s price movements.
However, the SEC put a spanner in those plans when it rejected the proposal, citing that Cboe had not done enough to convince the commission that it could protect investors and prevent fraudulent trading.
Similar To Previous Rejections
The rejection is not seen as anything out of the ordinary and is in line with previous rejections of ETFs that would track Bitcoin directly. Cboe and VanEck have been attempting to launch the first US Bitcoin ETF for almost ten years.
However, the SEC has dragged its feet and has been slow to approve them, citing the potential for manipulation, fraud, and a significant lack of regulation when it comes to Bitcoin. At the same time, several other Bitcoin ETF applications are still pending approval.
First Futures-Based Bitcoin ETFs
The rejection of the VanEck ETF comes only weeks after the SEC gave the green light to the first futures-based Bitcoin ETFs, the ProShares Bitcoin Strategy ETF. The ETF started trading on 19th October and shot up by 4% on one day. The second ETF was the Valkyrie Bitcoin Strategy ETF, which debuted on 22nd October.
VanEck already has had a Bitcoin Futures ETF since 23rd October, following in the footsteps of ProShares. However, the ETF has not started trading yet.
An Important Stepping Stone
Investors are of the belief that Futures-based ETFs are not as favorable or effective as an ETF that can directly track Bitcoin. However, there is consensus that they are an important stepping stone to achieving an ETF to track Bitcoin directly. However, it could be a while since that can become a reality.
Applications for futures-based ETFs have seen significant growth during the year, especially after Securities and Exchange Commission Chairman Gary Gensler stated that the SEC would be open to Futures-based ETFs.
ETFs Leaving Competition Behind
Morningstar has stated that crypto ETFs have dominated the top 20 positions of ETFs in Europe, making a complete sweep of the list. The top spot was taken by SEBA Polkadot ETC (SDOT), which launched in July. All of the top-three positions on the list were taken up by Polkadot ETFs.
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.
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