SEC Officially Denied SkyBridge Spot Bitcoin ETF Application

The United States Securities and Exchange Commission (SEC) has officially denied First Trust SkyBridge’s application for a spot Bitcoin exchange-traded fund (ETF) after several delays.

In one file On Thursday, the SEC rejected a proposed New York Stock Exchange (NYSE) Arca rule change for the listing and trading of shares in the First Trust SkyBridge Bitcoin ETF.

The SEC said any rule changes in favor of ETF approval were not “intended to prevent fraudulent and manipulative practices and practices” nor “to protect investors and interests.”

This decision comes after SkyBridge first applied to list a Bitcoin ETF on the NYSE in March 2021.

The SEC refused because the NYSE did not meet the requirements for listing a financial product under its rules of procedure as well as the provisions of the Exchange Act. Accordingly, exchanges wishing to list a BTC ETF must have a “comprehensive custody sharing agreement with a regulated market of significant size in which the underlying or reference Bitcoin asset participates.”

NYSE Arca used the example of a $10 million market order to explain that buying and selling large amounts of Bitcoin would have “negligible market impact.” The exchange also pointed to Tesla’s $1.5 billion purchase of BTC in February as an example of the company’s stock access to cryptocurrency, arguing that another investment vehicle with BTC exposure instead of an “imperfect Bitcoin authorization “ is required that only provides “partial bitcoin” exposure combined with added risk.”

The committee has denied these claims, citing similar reasons for VanEck’s rejection of Bitcoin ETF in November and WisdomTree in December. To date, the SEC has not approved any other ETFs directly exposed to cryptocurrency, but has given the green light to services linked to BTC futures, including those from ProShares and Valkyrie.

A separate decision on a Bitcoin ETF application from New York Digital Investment Group (NYDIG) is expected on March 16. The request is still under consideration after being delayed on Saturday.

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