The SEC's investor safety standards didn't meet the proposals by Valkyrie and Kryptoin.
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The Securities and Exchange Commission rejected applications for the spot bitcoin exchange traded funds on Wednesday, the latest blow to those hoping to get the financial products approved in the US.
Concerns about fraud and manipulation are the reason why the securities regulator has not given the go-ahead for a US exchange-traded fund that invests directly in thecryptocurrencies.
The SEC refused to list and trade the spot bitcoin products from Valkyrie and Kryptoin. These did not meet investor protection requirements.
The SEC said that neither proposal met its standard of being designed to prevent fraudulent acts and practices and to protect investors and the public interest.
The agency shot down a Cboe BZX Exchange application for a VanEck spot bitcoin exchange traded fund in November.
Eric Balchunas, an analyst with the data firm, said it's unlikely that a spotbitcoin exchange traded fund will get the green light in the US next year.
Balchunas said that they were optimistic about futures, but they were not confident in a 2022.
Gary Gensler, the chairman of the SEC, has indicated that the agency is in favor of Exchange Traded Funds that are related to the futures market for bitcoins, but not those that are based on the coin itself. Even though American investors can access spotbitcoinexchange traded funds listed in Canada, it has rejected or delayed applications.
The lack of sound custody options and price manipulation in spot markets have been flagged by the regulator in previous rejection orders.
Market participants believed that the SEC's approval of the futures exchange was a sign of change. On December 17th, it delayed decisions on applications from Grayscale and Bitwise.
The SEC is expected to make a ruling on Skybridge before January 22, and on Fidelity's Wise Origin application by January 27.
The first-ever futures-based bitcoin exchange traded fund was launched by ProShares in October. After just two days of trading, it became the fastest exchange traded fund to top $1 billion in assets under management.
The SEC gave the go-ahead to two other funds that use futures based on the price of bitcoin.
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Business Insider has an original article.
