By George Ward
The US Securities and Exchange Commission (SEC) has denied a proposal by VanEck, a top investment manager, to launch a spot Bitcoin trust. Meanwhile, commissioner Mark Uyeda stated with his fellow commissioner, Hester Peirce, denouncing the Commission’s ruling to deny authorization for the financial product’s listing and trading.
Commissioners Condemn SEC For Changing Policy Without Notice
According to the commissioners, the SEC has turned down nearly 20 applications for a spot BTC trust in the past six years. The commissioners added that the rejection of VanEck’s application follows the same evaluation criteria in the previous decisions.
“We believe the Commission is applying a distinct set of criteria to prevent these spot bitcoin ETPs from being listed on the exchanges we oversee. This criterion differs from the ones used for other commodity-based ETPs,” the statement reads.
The agency argues that VanEck lacks an “in-depth surveillance-sharing agreement with a licensed spot BTC-related market of significant size” due to the absence of a regulated underlying market. While this criterion applies to all ETPs, the commissioners expressed concern that the SEC is utilizing an excessively demanding interpretation of “significant” in its appraisal of spot Bitcoin ETP applications.
In addition, the commissioners pointed out that the SEC did not demand any linkage between the spot and futures markets be established for other commodity-based ETPs. Furthermore, they observed that the term “significant” was typically used to describe the liquidity and trading volume of the exchange in cases that did not concern Bitcoin.
Also, they emphasized that the SEC has a legal obligation to clarify any alterations made to its policy regarding the endorsement of commodity-based ETPs.
VanEck’s Battle For Spot BTC Trust Product
VanEck introduced a Bitcoin futures-linked financial product and initiated efforts to secure authorization for a spot-linked product in 2017. But the SEC postponed the approval process for VanEck’s second and third applications for a spot ETP for several months.
In November 2021, the SEC rejected VanEck’s second application. The regulator cited the firm’s failure to meet the necessary standards for safeguarding investors and preventing manipulative and fraudulent actions.
Despite previous setbacks, VanEck filed a third application for a BTC ETF offering with the SEC in June 2022. The company outlined several reasons why the SEC should reevaluate its past decisions.
VanEck’s main argument was that American funds were getting exposure to Bitcoin via BTC spot ETPs available in Canada. In February 2021, Canada, America’s neighboring country, approved a spot Bitcoin ETF, making it one of the first countries in the world to take such steps.
In February, Uyeda stated the SEC’s proposal to increase custody regulations. He suggested that the custody guidelines may be disguising an intention to prevent access to cryptocurrency as an asset class.