SEC rejects Bitwise Bitcoin ETF proposal

The US SEC once again proved the unwillingness for Bitcoin ETFs by rejecting the Bitwise Asset Management company's ETF proposal.

October 10, 2019, | AtoZ MarketsThe US Securities and Exchange Commission once again proved it is highly unwilling to allow the launch of a Bitwise Bitcoin exchange-traded fund (ETF). The proposal by Bitwise Asset Management was once again reviewed and rejected.

The SEC once again rejected the proposal, on the grounds that Bitwise and its partner NYSE Arca failed to explain the potential to protect the ETF investors from market manipulation affecting BTC spot prices.

The ETF proposal hinged on claims by Bitwise that BTC had a highly regulated spot market for dollars, where real volumes and price discovery happened. However, Bitwise also noted that up to 95% of BTC trading may be faked, and failed to offer a solution. The SEC also suspected that an entity could manipulate both the ETF price and spot markets.

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US SEC rejects Bitwise Bitcoin ETF

The latest exploratory period for the Bitsiwe fund extended from August 12 onward, once again sparking some hopes that a fund launch would be possible. During that time, the Bakkt exchange received the green light to offer BTC futures with the delivery settlement. Cash-settled futures for BTC are also highly active.
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The US SEC order says:

“The Commission is disapproving this proposed rule change because, as discussed below, NYSE Arca 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 6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices.'”

However, an ETF would reach a much wider audience, potentially creating risks for personal finance. An ETF is also directly responsive to the underlying asset price, exposing buyers to BTC volatility. For BTC, it is not unusual to note a price swing of above $1,000 per day.

The BTC market price was unaffected by the news of the rejection, which was mostly predictable. BTC traded at $8,531.19 on Thursday, after recovering to above $8,600.

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