Tuesday, January 18

No Spot Bitcoin ETFs for American Investors This Year: SEC Shots Down Two Proposals


Reflecting on the past year, 2021 has been great for Bitcoin and the cryptocurrency market. It even saw the birth of two BTC futures ETFs in the States, but with just a week remaining until the end of it, American investors might not see spot one.

SEC in no Mood for Spot Bitcoin ETFs

According to the official document, the SEC rejected physically-backed Bitcoin ETFs proposed by Valkyrie and Kryptoin. The regulator cited similar market manipulation concerns while referring to both to list and trade shares of Valkyrie Bitcoin Fund and the Kryptoin Bitcoin ETF Trust.

It stated that the two proposals did not meet its standard designed to ward off fraudulent and manipulative practices as well as protect market players and the public interest.

The two entities that filed to propose rule modifications to list and trade the two ETFs were NYSE Arca and Cboe BZX Exchange. However, the Commission noted that both “have 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).”

Besides, the US regulator started a formal review of Kryptoin’s bitcoin exchange-traded fund application in April this year. This isn’t the first time that the Delaware-based company has faced rejection. In 2019, the company failed to get a green signal from the regulatory authorities.

The decision comes more than a month after the SEC denied VanEck’s application for a spot Bitcoin ETF.

The launch of the first spot-Bitcoin ETF, remains in limbo for many investment fund providers across the country. However, the latest move isn’t surprising, as SEC Chair Gary Gensler has been very clear about his preference.

BITO Fails to Charm Investors

After years of failed attempts, the SEC finally approved BITO – the ProShares Bitcoin Strategy ETF. However, in the first two months of its trading, the ETF paled in comparison to the underlying asset’s spot price.

According to Bloomberg Intelligence ETF Analyst James Seyffart, BITO was trailing spot by 2.34% with just about two months of data. Going forward, Seyffart believes the fund will continue to underperform spot by 13-14% in its first year. The gap between the asset and the fund is significant. As a result, many financial advisors would opt for it.

However, some long-term investors argue that offerings with a smaller allocation to BTC futures contracts could, in fact, emerge as more dominant in the coming year.

Featured Image Courtesy of CNN

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