U.S. SEC rejects Grayscale’s spot bitcoin ETF

By Akriti Sharma and John McCrank

(Reuters) – The U.S. securities regulator on Wednesday rejected a proposal to checklist a spot bitcoin exchange-traded fund (ETF) by Grayscale, one of many world’s greatest digital asset managers, on the NYSE Arca change.

Grayscale responded with a authorized problem to the choice, the newest in a sequence of rejections of proposals for U.S. listings of spot bitcoin ETFs over the previous 12 months.

The proposal to checklist the ETF didn’t meet the usual designed to forestall fraudulent and manipulative practices and defend buyers and the general public curiosity, the Securities and Trade Fee (SEC) stated in a submitting https://www.sec.gov/guidelines/sro/nysearca/2022/34-95180.pdf.

Grayscale proposed creating the ETF as a conversion of its Grayscale Bitcoin Belief. Intercontinental Trade Inc owns NYSE Arca.

The SEC stated its disapproval didn’t relaxation on “an evaluation of whether or not bitcoin, or blockchain expertise extra typically, has utility or worth as an innovation or an funding.”

Grayscale stated that in response it had filed a lawsuit in opposition to the regulator and would argue that the SEC had violated the Administrative Process Act and Securities Trade Act.

In an announcement it pointed to the SEC’s approval of ETFs primarily based on bitcoin futures. “If regulators are comfy with ETFs that maintain derivatives of a given asset, they need to logically be comfy with ETFs that maintain that very same asset,” it stated.

In rejecting greater than a dozen proposals for spot bitcoin ETFs over the previous 12 months, the SEC has targeted on a scarcity of surveillance-sharing agreements with a regulated market of great measurement regarding the underlying property.

The value of bitcoin, the biggest digital forex, is down about 70% from its excessive of round $69,000 in November.

Different cryptocurrencies and crypto-related shares have plunged in latest months as buyers have dumped riskier property in response to excessive inflation and coverage tightening by main central banks.

Issuers of spot bitcoin ETFs rejected by the SEC in latest months have included Constancy, SkyBridge and Valkyrie, all of which sought to offer simple publicity to the digital forex.

(Reporting by Akriti Sharma in Bengaluru and John McCrank in New York; Modifying by Leslie Adler and Bradley Perrett)