The SEC Denies Fidelity’s Spot Bitcoin ETF Application

Another day, another SEC Bitcoin spot ETF denial. The U.S. Securities and Exchange Commission has continued its long-standing practice of denying approval for Bitcoin spot ETFs.

The SEC ruled to deny Fidelity’s application for Bitcoin spot exchange traded fund (ETF), according to a newly released filing. The SEC raised the same old concerns about fraud, manipulation and investor protection, which have been floated by the regulator for years, dating back to its rejection of a first bitcoin ETF proposal by Gemini exchange. 

Fidelity’s rejected ETF had support from the Chicago Board Options Exchange’s BZX Exchange, and it was filed with the SEC on May 10, 2021. 

The SEC pushed back the decision deadline on the Fidelity ETF first in July and then again in November.

The Commission wrote:

BZX 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” and “to protect investors and the public interest.”

The Securities and Exchange Commission last year approved several Bitcoin Futures ETFs last year, such as ProShares and Van Eck. However, the futures ETFs do not actually track underlying price of Bitcoin, to which there was great exuberance, as evidenced by one nearing trading records upon its debut. However, the SEC denied multiple spot ETFs last year, and postponed many others.

Last week, the SEC shot down a proposed spot ETF focused on bitcoin from First Trust and Skybridge Capital on identical grounds. A decision on an ETF submission from Stone Ridge and NYDIG is expected by mid-March.