One River’s Carbon Neutral Bitcoin ETF rejected by SEC

The One River Carbon Neutral Bitcoin Trust – a spot Bitcoin exchange-traded fund (ETF) proposed by One River Asset Management – has been rejected by the U.S. Securities and Exchange Commission (SEC).

The proposed environmentally aware spot ETF, like many other ETF proposals before it, was determined to be insufficiently safeguarded against fraud and manipulation.

The United States Securities and Exchange Commission (SEC) maintained its perfect record of rejecting Bitcoin (BTC) spot exchange-traded fund (ETF) applications on Friday, rejecting a rule change that would have allowed cryptocurrency-focused hedge fund One River Digital to offer the One River Carbon Neutral Bitcoin Trust on the New York Stock Exchange Arca.

The decision was made slightly ahead of schedule, since the agency had extended the initial deadline to June 2 to allow for further review.

The commission wrote that, when considering One River’s proposed rule change, it applied “the same standard used in its orders considering previous proposals to list Bitcoin-based commodity trusts.” Specifically, the proposed rule change did not meet the SEC’s rules around fraud prevention. The SEC further clarified:

“[…] disapproval of this proposed rule change does not rest on an evaluation of whether Bitcoin or blockchain technology more generally, has utility or value as an innovation or an investment.”

One River filed a registration for the ETF in May 2021, but the SEC delayed its decision in March. One River pledged to buy and sell carbon credits to account for the emissions linked with the bitcoin in the fund, which set it apart from other spot ETF applications.

While the SEC has approved a handful of futures-based bitcoin ETFs, it has denied (or postponed) all spot Bitcoin ETFs that have been proposed. To name two, the FDA dismissed petitions submitted by NYDIG and GlobalX in March.

Grayscale has become more aggressive in its pursuit of regulatory approval for a spot-traded Bitcoin ETF. The digital asset manager has threatened to sue the SEC if its application is refused, and has lately launched a campaign to garner public support for its proposal.

Valkyrie was the most recent futures-based Bitcoin ETF to receive SEC approval. The asset manager had applied under the Securities Exchange Act of 1934. Other Bitcoin futures ETFs that have been approved fall under the Investment Company Act of 1940. The Valkyrie “34 Act” approval had given some Bitcoin ETF supporters hope.

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