The SEC continues to hold its ground, rejecting WisdomTree’s application for approval of an ETF on spot Bitcoin.
Summary
WisdomTree, no ETF on spot Bitcoin
WisdomTree wanted to list its ETF on the CBOE, which is why it reportedly applied to the exchange, which in turn applied to the SEC. In the document released in recent days, the SEC explains the reasons why it again rejected the application:
“The Commission concludes that BZX has not established that other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with the requisite surveillance-sharing agreement. The Commission further concludes that BZX has not established that it has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to bitcoin. As a result, the Commission is unable to find that the proposed rule change is consistent with the statutory requirements of Exchange Act Section 6(b)(5)”.
In essence, according to the SEC, the CBOE would not be able to demonstrate that the markets underlying the ETF are regulated and free of manipulation and fraud. This is despite the fact that the Bitcoin market is now mature and has grown significantly compared to the past.
The SEC therefore reaffirms its stance: ETFs based on Bitcoin futures have found a place because the futures market is regulated. In contrast, it is unable to say the same about spot markets.
To be fair, this is an argument that does not stand up too well because Bitcoin futures markets are based on spot markets anyway.
Canada approves Fidelity ETFs
While there is no hope (at least for the moment) of seeing spot Bitcoin ETFs approved in the US, Canada is once again leading the way.
Fidelity has launched no fewer than two spot Bitcoin-based ETFs, the Fidelity Advantage Bitcoin exchange-traded fund (ETF) and the Fidelity Advantage Bitcoin ETF Fund, on the Toronto Stock Exchange.
Canadian investors will be able to invest in an ETF based on physical Bitcoin. Those in the United States will not.
NFT-based ETFs are coming
The SEC is adamant that it will not approve ETFs based on physical Bitcoin, but it has allowed an exchange-traded fund based on NFTs to come to market. It’s called NFTZ and it’s a fund that doesn’t put actual NFTs in its basket, but shares in companies that trade NFTs. These include Coinbase, Square, Robinhood and even Playboy. It has been listed on the NYSE (where BITO, the first Bitcoin futures ETF, is also listed).
It was launched by Defiance ETFs, an ETF company and investment adviser specializing in thematic ETFs. In its offering,, Defiance also has ETFs focused on 5G, Big Data, and innovative industries.
The company explicitly writes that the only limitation the NFT market has is the virtual sky. The limitation that ETFs have is called the SEC and this is well understood by investors who are still waiting for a fund based on physical Bitcoin.
