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United States SEC Bounces Fidelity’s Application for Spot Bitcoin ETF

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In its characteristic manner, the United States Securities and Exchange Commission (SEC) has rejected the application to list a Bitcoin Exchange Traded Fund (ETF) product filed by Fidelity Investments. Per the decision which detailed the reasons for the rejection of the product dubbed Wise Origin Bitcoin Trust, the SEC said that the Cboe BZX Exchange where Fidelity plans to list the product has not fulfilled the requirements to prevent market manipulation under the BZX rule.

“It is essential for an exchange listing a derivative securities product to enter into a surveillance-sharing agreement with markets trading the underlying assets for the listing exchange to have the ability to obtain information necessary to detect, investigate, and deter fraud and market manipulation, as well as violations of Exchange rules and applicable federal securities laws and rules,” stated the SEC ruling.

In the light of this, the market regulator said Cboe has not provided the necessary safeguards to facilitate the efficient monitoring of all players for the ETF product such that manipulations can be prevented.

Fidelity filed the application back in March 2021, and this rejection marks the end of the road for the proposed plans to list a Bitcoin spot ETF product at this time.

Hope for Spot Bitcoin ETFs in the US

For a couple of years now, investors have been anticipating the official launch of a spot Bitcoin ETF product in the United States, a product that the SEC is particularly very cautious to approve. 

While the digital currency ecosystem is worth approximately $2 trillion barring the currency’s massive price dip, the market watchdog believes the ecosystem is not big enough to prevent price manipulation, and as such, has used this as a yardstick to deny the applications for spot Bitcoin ETF products filed by homegrown investors in the past couple of years.

With the majority of Bitcoin assets in the hands of a selected few, the SEC’s skepticisms are justified as these individuals can easily influence the price of Bitcoin in a significant manner. This caution from American regulators is notably confined to the country as a neighboring nation, Canada has approved a spot Bitcoin ETF product from a number of applicants, including Fidelity whom the US SEC just denied its application.

While the hopes for a full-fledged Bitcoin ETF product are bleak for now, investors believe that the SEC is coming around, especially with the approval of ProShares and Valkyrie’s BTC ETF products tracking the futures price of the premier cryptocurrency.

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