SEC Rejects Bitcoin ETFs From NYDIG and Global X


Key Takeaways

  • The SEC has rejected two proposals for Bitcoin ETFs from the investment management firms NYDIG and Global X.
  • The Bitcoin investment funds were intended to go live on two exchanges: NYSE Arca and Cboe BZX, respectively.
  • The regulator cited concerns around the ability of the targeted exchanges to prevent fraud and protect investors.

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The U.S. Securities and Exchange Commission (SEC) has rejected two Bitcoin ETF proposals from NYDIG and Global X.

Two ETF Proposals Rejected

Two proposals for Bitcoin exchange-traded funds (ETFs) were rejected by the SEC in individual filings dated Mar. 10, 2022.

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The first rejection from the SEC concerns a Bitcoin ETF from NYDIG that targeted a launch on the NYSE Arca exchange. The fund’s proposed rule change was filed in June 2021.

The second rejection concerns Global X’s Bitcoin Trust, which was intended for trading on the Cboe BZX exchange. This investment fund’s proposed rule change was filed in August 2021.

In each case, the SEC concluded that the entity behind the proposal “[had] not met its burden…to demonstrate that its proposal [was] consistent with the requirements” of the relevant regulations.

In particular, the regulator said that the target exchange’s design was not sufficient to prevent fraud and manipulation, nor was it sufficient to provide protection to investors and the public interest.

Still No Bitcoin ETF in the U.S.

NYDIG’s fund was one of many competing proposals that aimed to launch the first Bitcoin spot ETF. The SEC planned to make a decision in January 2022 but delayed its decision that same month.

The name of Global X’s Bitcoin Trust suggests a fund similar to already-operational Bitcoin trusts from Grayscale and Valkyrie, which would at first glance give it an advantage with regulators. Yet it appears that this is not actually the case, as Global X’s SEC filing refers to the investment vehicle as an exchange-traded fund.

No Bitcoin spot ETF has been approved by the SEC to date. The regulator has rejected proposals from Fidelity, VanEck, and WisdomTree, among others, in recent months.

However, a number of futures ETFs have been approved by the regulator, namely those from ProShares, Valkyrie, and VanEck.

Additionally, Bitcoin spot ETFs have been approved in other countries. These funds began to become available in Canada in 2021, with Fidelity launching a Canadian spot ETF in December.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.

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