SEC rejects application for Fidelity’s Wise Origin Bitcoin Trust spot ETF
The regulatory body said any rule change in favor of approving the ETF would not be aimed at preventing “fraudulent and manipulative acts and practices” nor would it necessarily “protect investors and the public interest.”
The United States Securities and Exchange Commission has disapproved asset manager Fidelity’s Wise Origin Bitcoin Trust spot exchange-traded fund (ETF) application.
According to a Thursday filing, the SEC rejected a proposed rule change from the Cboe BZX Exchange to list and trade shares of Fidelity’s Wise Origin Bitcoin (BTC) Trust. The regulatory body said any rule change in favor of approving the ETF would not be aimed at preventing “fraudulent and manipulative acts and practices” nor would it necessarily “protect investors and the public interest.”
The SEC extended its deliberation window to approve or deny the offering in July and November following Fidelity’s original application in March 2021 — but published in the Federal Register on June 1. The SEC added that the BZX exchange “has 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.”
“It is essential for an exchange listing a derivative securities product to enter into a surveillance-sharing agreement with markets trading the underlying assets for the listing exchange to have the ability to obtain information necessary to detect, investigate, and deter fraud and market manipulation, as well as violations of exchange rules and applicable federal securities laws and rules,” stated the SEC ruling.
“While we are disappointed by the outcome of the SEC’s deliberations resulting in today’s disapproval order, we reaffirm our belief in market readiness for a physical bitcoin exchange traded product and look forward to continued constructive dialogue with the SEC,” said Fidelity investments communications director Claire Putzeys.
The decision followed separate filings from the SEC on Tuesday, extending its window on a proposed rule change to allow shares from agricultural fund provider Teucrium tracking Bitcoin futures to be listed on NYSE Arca and ARK 21Shares Bitcoin ETF to be listed on the Cboe BZX Exchange. The final extension from the regulator will likely result in a decision by April 8 and April 3, respectively.
While the SEC has yet to approve ETFs with direct exposure to BTC, the regulator gave the green light to investment vehicles linked to BTC derivatives for the first time in October 2021. At the time of publication, shares of Bitcoin futures-linked funds from Valkyrie and ProShares are currently listed on Nasdaq, with VanEck’s Bitcoin Strategy ETF trading on the Chicago Board Options Exchange.
Many analysts do not expect SEC officials to approve Bitcoin-linked ETFs anytime soon. The regulatory body is expected to reach a decision on NYDIG’s spot Bitcoin ETF and asset manager Stone Ridge Holdings Group’s BTC ETF on March 16.