The Securities and Exchange Commission (SEC) has once again denied an attempt to list a Bitcoin Exchange Traded Fund (ETF).
In a filing last week, the SEC outlined its justification “disapproving a proposed rule change to list and trade shares of the First Trust SkyBridge Bitcoin ETF Trust.” The rule change request was filed by NYSE Arca.
Bitcoin proponents have long sought to create an easier path for retail investors to participate in the world’s most popular cryptocurrency. Advocates believe that a regulated ETF that holds Bitcoin will encourage more investors to buy BTC via a more traditional broker-dealer relationship. Detractors point to the fact that a single asset ETF makes little sense when you can buy Bitcoin directly via a growing number of platforms. As well, some believe the largely unregulated Bitcoin market is prone to manipulation and fraudulent uses.
John Reed Stark, a former SEC enforcement executive, posted on LinkedIn today casting dispersion on the possibility that a BTC ETF will ever happen. He stated:
“The SEC letter order confirms what I have been harping on for years – that the cryptocurrency marketplace is an unregulated anarchical, chaotic morass that not only facilitates a digital Ponzi scheme but is also vulnerable to the most dangerous and devastating sorts of market manipulation, fraud and chicanery. It’s thieves cheating thieves, with everyday investors their ultimate victims. Crypto has become the killer app for committing fraud, and the proliferation of unregulated cryptocurrency trading platforms is powerful evidence of that fact.”
Reed Stark went on to say that Bitcoin’s biggest use is for criminal purposes such as money laundering, extortion and other nefarious activities.
The SEC’s Order states:
“… for bitcoin-based ETPs [exchange traded products], the Commission has consistently required that the listing exchange have a comprehensive surveillance-sharing agreement with a regulated market of significant size related to bitcoin, or demonstrate that other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with the requisite surveillance-sharing agreement. The listing exchange has not met that requirement here. Therefore the Commission is unable to find that the proposed rule change is consistent with the statutory standard.”
Meanwhile, Bitcoin is nearing a new 52-week low trading around $33,000 well off its 52 week high of over $67,000.