The Securities and Exchange Commission has been in the front rows at odds with the cryptocurrency industry. The latest blow from the regulator came in the form of a rejection of Bitcoin spot ETF applications.
It seems that SEC wants to send a message about the timing of the recent spot ETFs rejection. The two applications turned down were filed by the Kryptoin Bitcoin ETF fund and Valkyrie Bitcoin fund. The main reason for the disapproval was noted that the applicants failed to meet the eligibility criteria set by SEC.
SEC has made it clear that for the current year, no Bitcoin spot ETFs are going to get a listing or approval in the United States. According to Twitter user Henry Jim, SEC slammed the spot BTC application for violating Exchange Act Section 6b5. The SEC also added the comment that the spot applications showed signs of suspicious activity like fraud and market manipulation.
The two cryptocurrency organizations that applied are Cboe BZX exchange and NYSE Arca. According to many cryptocurrency stakeholders, the move by SEC does not come as a big surprise as the newly appointed SEC chief Gary Gensler made his Bitcoin ETF requirements very clear.
The ETF or exchange-traded products allow the institutional and big investors to seek positions in Bitcoin without having to purchase the asset directly. Thus far, SEC has approved BITO, a strategy ETF product by ProShares. However, the market participants are not happy with its performance due to a massive gap from its BTC spot prices.
James Sayffart is an ETF analyst who recently told Bloomberg that trailing spot rates for BITO was measured at 2.34% within the last 60 days. He also projected that the ETF product is likely to keep underperforming by 13-14% during the first year of its listing. Meanwhile, some investors believe that a small allocation of funds in Bitcoin futures can prove to be a big achiever in the upcoming years.