SEC Rejects WisdomTree’s Spot Bitcoin ETF Application

The U.S. Securities and Exchange Commission (SEC) has denied WisdomTree’s application for a spot bitcoin exchange-traded fund (ETF), the agency said in a letter on Wednesday.

• Approval would have allowed retail and institutional investors to invest in a regulated financial product incorporating the world’s oldest cryptocurrency, without requiring them to invest in the crypto directly.

• The decision comes seven months after the regulator said it would start evaluating the WisdomTree Bitcoin Trust, which the ETF giant filed with the Cboe BZX exchange in March. The agency delayed its decision in June and again in July, as well as its consideration of other bitcoin spot ETFs.

• “The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest,’” the agency wrote.

• The SEC’s decision was not unexpected as SEC Chair Gary Gensler has indicated multiple times in the past a preference for a bitcoin futures ETF over an ETF that holds bitcoin directly. Last month, the SEC rejected investment firm VanEck’s proposal for a spot bitcoin ETF.

• Two bitcoin futures ETFs, the ProShares Bitcoin Strategy ETF (BITO) and the Valkyrie Bitcoin Strategy ETF (BTF), began trading in the U.S. in October, leading to a significant rally in the price of bitcoin. VanEck’s bitcoin futures ETF began trading in mid-November.

• At the time of publication, bitcoin was trading down 1%.

UPDATE (Dec. 2 17:49): Corrects when VanEck’s bitcoin futures ETF began trading.