SEC Rejects VanEck Spot Bitcoin ETF, But its Futures ETF Finally Coming Next Week
The US Securities and Exchange Commission (SEC) rejected rule changes that would have allowed the listing and trading of the VanEck Bitcoin exchange-traded fund (ETF).
In March, the Cboe BZX Exchange filed a proposed rule change to list and trade shares of the Bitcoin Trust, but the SEC again rejected the physically-backed ETF after delaying the decision on the application twice.
This time, the regulator reiterated its long-stated concern that a product based on the spot price of Bitcoin could violate securities rules because the market is too prone to abuse. The SEC in its order, said,
“The Commission applies the same standard used in its orders considering previous proposals to list bitcoin-based commodity trusts and bitcoin-based trust issued receipts — that it must be designed to prevent fraudulent and manipulative acts and practices”
“The Commission concludes that BZX has not met its burden.”
Meanwhile, the agency let the future-based Bitcoin ETFs start trading last month.
As per the document, SEC believes actors could manipulate the spot Bitcoin market without impacting the CME Bitcoin futures pricing, which doesn’t make sense to the crypto industry and the ETF experts.
“Since the SEC has already approved a futures-based bitcoin ETF, we strongly believe it should approve a spot ETF as well. We encourage the SEC to give bitcoin the fair and equal treatment it deserves, and hope future ETF proposals receive their due consideration,” wrote Blockchain Association on Twitter, showing their strong disagreement with the SEC’s decision.
2/ VanEck proposed an ETF that would hold actual bitcoin rather than expensive futures contracts that track bitcoin's price. Most experts believe this type of product is better for investors than the already-approved futures ETFs, because it’s less complex and incurs fewer costs.
— Blockchain Association (@BlockchainAssn) November 12, 2021
Two bitcoin futures ETFs, the ProShares Bitcoin Strategy ETF (BITO) and the Valkyrie Bitcoin Strategy ETF (BTF), began trading in late October and led to a rally in the price of the leading cryptocurrency.
While its proposal for a spot Bitcoin ETF has been rejected, VanEck has set a date to launch its own futures-based Bitcoin ETF. The ETF (XBTF) is set to launch next week on Nov. 16 on Cboe Global Markets.
At an expense ratio of 0.65%, XBTF undercuts the 0.95% charged by the other bitcoin futures ETFs. The fund is actively managed and reserves the right to invest in bitcoin-related companies closely tied to the price of bitcoin futures.
VanEck has been initially eligible to launch since Oct. 23, but the issuer held off launching.
BITO saw massive attraction as it amassed $1 billion in assets in its just first two days of trading. Meanwhile, after BITO, demand for BTF was far less dramatic as it only has $63 million in assets under management.