Bitcoin ETF”s has been making rounds for the past couple of years, but since its inception, the entity has faced the wrath of both the government and the regulators. In the most recent series of events, the US Securities and Exchange Commission[ SEC] dismissed another proposed ETF.
The regulators shot down the ETF proposed by Wilshere Phoenix, who thought he was going to do away with the ‘ ETF rejection trend. ‘
Phoenix had applied for Equity Trading Fund [ETF] in May 2019 with the New York Stock Exchange [NYSE] Arca. The SEC rejected the ETF by stating there was no proof that Bitcoin could sustain without market manipulation. The issue of manipulation was brought up again because of the incessant dips in prices that occurred recently.
According to the official SEC release:
“The Commission concludes that NYSE Arca 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”
Over the last two years, the SEC has rejected multiple ETFs, one of the most popular being the VanEck ETF. The ETF was tabled multiple times by the regulator for reasons such as ‘cloudy regulations’ and ‘manipulative markets’. Phoenix’s proposed ETF wanted to mix Bitcoin and short-term treasures, according to the SEC release.
The decision to reject the ETF has not boded well with some people and Hester Peirce was definitely one of the enraged members. Peirce, who is the Commissioner of the SEC wrote a scathing dissent where she pointed out that the SEC had a ‘heightened standard’ only for Bitcoin.
Peirce opined that the multiple rejections only meant the SEC had no plans to list products such as Bitcoin and other cryptocurrencies anytime soon. She also clapped back at the ever-shifting standards that the SEC sets just for digital assets. The Commission has been a vocal supporter of Bitcoin ETF and has even made positive comments about the industry earlier.
The proposed fund had plans to change the way people trade Bitcoin and how the cryptocurrency would respond to changes in its price. Wilshere Phoenix had claimed that his Bitcoin ETF would automatically rebalance itself in response to Bitcoin’s price volatility. To balance a change, the now rejected fund would put more capital into bonds and vice versa.