SEC Rejects VanEck Spot Bitcoin Trust Proposal

The United States Securities and Exchange Commission has rejected a proposal by investment manager VanEck to create a spot Bitcoin trust, a financial product that would allow investors to trade Bitcoin on regulated exchanges. This marks the latest instance of the SEC denying any application for a spot Bitcoin trust, with nearly 20 such applications having been filed over the past six years.

In a statement, SEC Commissioners Mark Uyeda and Hester Peirce criticized the commission’s decision, alleging that it used a different set of criteria to evaluate spot Bitcoin trusts compared to other commodity exchange-traded products (ETPs). The statement reads: “In our view, the Commission is using a different set of goalposts than those it used – and continues to use – for other types of commodity-based ETPs to keep these spot bitcoin ETPs off the exchanges we regulate.”

The SEC’s decision comes amid growing institutional interest in Bitcoin and cryptocurrency investments, with Bitcoin recently hitting record highs. However, the SEC has been hesitant to approve financial products based on cryptocurrencies due to concerns about market manipulation, volatility and fraud.

The proposed spot Bitcoin trust would have allowed investors to trade Bitcoin on regulated exchanges, providing greater accessibility to the cryptocurrency market. However, the SEC’s decision means that investors will still be limited in their ability to invest in Bitcoin through regulated channels.

VanEck had previously attempted to launch a Bitcoin ETF (exchange-traded fund) in 2017, but withdrew its application after facing opposition from the SEC. The investment manager had hoped that the proposal for a spot Bitcoin trust, which would have required less regulatory approval than an ETF, would have been more successful.

Despite the SEC’s decision, Bitcoin and other cryptocurrencies remain popular investments among private and institutional investors. However, the lack of regulatory oversight and the potential for market manipulation in the cryptocurrency market continue to be a concern for both regulators and investors. The denial of VanEck’s proposal for a spot Bitcoin trust highlights the ongoing debate about how best to regulate and integrate cryptocurrency investments into traditional financial systems.