SEC finds spot bitcoin ETF applications lacking in details

Sources state that the SEC isn’t convinced that the Bitcoin ETF applicants have outlined adequately their strategies for handling a “surveillance-sharing agreement”. This agreement, designed to inhibit fraudulent practices and manipulation, requires fund issuers to monitor market trading activity, clearing activity, and customer identity. According to the SEC, all Bitcoin ETF applications to date have not met this criterion satisfactorily.

BlackRock’s participation in the race caused a surge in bitcoin’s value, resulting in several other key fund managers following in their footsteps. Yesterday, leading American firm Fidelity put forth an application. Additional submissions have been received from Invesco, Wisdom Tree, Valkyrie, and Bitwise.

A spot Bitcoin ETF remains non-existent in the U.S. due to the SEC’s continued reluctance towards approval. The commission maintains that the potential manipulation of bitcoin’s price is one of the primary deterrents.

However, investors are eager for such a product, which would offer them a route to engage with bitcoin without dealing directly with asset custody, as per industry experts.

In its application submitted yesterday, Fidelity suggests that their product would allow investors seeking exposure to the crypto sector to circumnavigate associated risks. An ETF is an investment instrument that shadows the value of a base asset such as gold, foreign currencies, or bitcoin.

Despite these concerns, the SEC recently gave the green light to the inaugural leveraged Bitcoin futures ETF: Volatility Shares 2x Bitcoin Strategy ETF (BITX), which became available to investors on the Chicago Board Options (CBOE) BZX Exchange last Tuesday.

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