Today, the Securities and Exchange Commission (SEC) denied once again a request to list and trade shares of the VanEck Bitcoin Trust on the Cboe BZX Exchange.
The Commission said that BZX had not demonstrated sufficiently it would protect investors and guard against fraud and manipulative actions. Part of the justification for the refusal is the Commission decided that the “exchange has not established that the futures market is a ‘market of significant size’ in relation to the Bitcoin spot market.”
Commissioners Hester Peirce and Mark Uyeda, Republican members of the Commission, issued a statement criticizing the decision, focusing on the term ‘significant” and its usage as it appears to be arbitrary and opaque.
The two Commissioners stated:
“We believe that the Commission’s decision to subject spot bitcoin-based ETPs to a bespoke standard that may be impossible for any product to meet has harmed investors by making it harder for the Bitcoin market to mature through institutionalization and easier, and potentially safer, retail investor access. But our concern is not just with Bitcoin. If we use the test in other markets, we will prevent other products from coming to market. Had we applied the test to other commodity-based ETPs, they might not be trading today. Arbitrarily depriving investors of access to products does not protect them. Consistent application of the standards Congress gave us does.”
The Commissioners noted that “the Commission has crafted a new standard for determining whether a futures market is significant. Not only has the Commission failed to provide an explanation for the change, but it has failed even to acknowledge that there has been a change.”
As the Commissioners believe the SEC should be consistent in their approach, Peirce and Uyeda have dissented with the decision.