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SEC Rejects VanEck Spot Bitcoin ETF; Bitcoin Stocks Mixed


The SEC on Friday rejected VanEck’s application for a spot Bitcoin exchange traded fund, marking the latest setback in efforts to gain regulatory approval for a fund that tracks the cryptocurrency directly.




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The price of Bitcoin fell. Other Bitcoin stocks were mixed.

The agency said the effort to list the ETF, the VanEck Bitcoin Trust, hadn’t shown that it was consistent with existing rules, particularly those related to preventing “fraudulent and manipulative acts and practices” and protecting investors and the public.

The notice from the SEC comes after it recently allowed trading to begin for exchange traded funds tied to Bitcoin futures and companies involved in the cryptocurrency industry. But regulators have been reluctant to approve an ETF that offers direct exposure to Bitcoin itself.

“We are obviously disappointed in today’s update from the SEC declining approval of our physical bitcoin ETF,” VanEck CEO Jan van Eck said in a statement.

“We continue to believe that investors should have the ability to gain exposure to bitcoin through a regulated investment product and that a non-futures ETF structure is the superior approach,” the ETF and mutual fund manager’s statement continued.

Price of Bitcoin, Bitcoin Stocks

The SEC’S move could also spell trouble for Grayscale Bitcoin Trust (GBTC), which has applied to become a spot Bitcoin ETF. Shares of the trust were down 1.4% in the stock market today.

The price of Bitcoin slipped 1.2% to $64.242. Among other Bitcoin stocks, Coinbase (COIN) was up 2%. Microstrategy (MSTR) lost 0.8% and Hut 8 Mining (HUT) rose 7.8%.

ProShares Bitcoin Strategy ETF (BITO) fell 1.2%. Among other Bitcoin-related ETFs, Valkyrie Bitcoin Strategy (BTF) lost 1.25%.

The application for the VanEck Bitcoin Trust was filed in March by CBOE BZX Exchange. At that time, BZX proposed a rule change to list and trade shares of the VanEck Bitcoin fund.

U.S. regulators have been concerned about cryptocurrencies’ volatility and their potential use for fraud. Concerns also persist about market manipulation and energy use. Abroad, China has tried to stamp out crypto-related activity.

Still, Bitcoin rallied to record highs this month. That advance has been attributed to concerns about weaker buying power for traditional currencies and signs of more interest from bigger investors. The acceptance of Bitcoin-related ETFs has also lifted the cryptocurrency’s price.

Despite Friday’s rejection, Dave Abner, global head of business development at the crypto exchange Gemini, still saw more gains for the price of Bitcoin and other cryptocurrencies against that backdrop.

He also said the investing community could seek out alternative routes to direct exposure to digital assets.

“With the continued rejection of a physical BTC ETF, advisors are more and more just going directly to firms who offer the ability for them to get direct exposure to the wide range of cryptocurrencies using a sub-accounting infrastructure,” he said over email.

“The continued delays and further development of the ecosystem could push a physical Bitcoin ETF closer towards irrelevance as advisors find other paths to holding digital assets.”

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