Stamped paper saying REJECTED

SEC shoots down WisdomTree’s BTC spot ETF, cites market manipulation

The U.S. securities regulator has shot down yet another BTC spot exchange-traded fund (ETF), this time from New York-based asset manager WisdomTree. The agency, as it has with all the prior rejections, said the digital asset market is prone to fraud and manipulation.

WisdomTree applied for the spot ETF in January 2022, seeking to be the first company that breaks the string of rejections by the Securities and Exchange Commission (SEC). In March, the agency announced it had extended its decision deadline and again in August.

Despite the extensions, the SEC’s stance hasn’t changed.

“This order disapproves the proposed rule change. 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 requirements of Exchange Act which requires, in relevant part, 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 said.

The SEC has been consistent in its rejection of BTC spot ETFs. This year alone, it has rejected applications from Fidelity Investments, NYDIG, Global X, and Grayscale.

For WisdomTree, this isn’t the first rejection. In December 2021, the SEC rejected its first application. Even back then, it cited manipulation and fraud as the key reasons for its hesitancy to legalize BTC spot ETFs.

Despite the rejections, WisdomTree remains hopeful that in the near future, the SEC will change its stance. Speaking recently, the head of digital assets at the company Will Peck said he was hopeful the agency “will ultimately get there.”

As WisdomTree accepts the rejections, Grayscale is going in the opposite direction. The Digital Currency Group-owned company, which has been attempting to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF, filed a lawsuit against the SEC this week, blasting the agency for the rejection.

The SEC’s decision is “arbitrary, capricious, and discriminatory,” the lawsuit claimed.

“The Commission has violated the APA’s most basic requirements by failing to justify its vastly different treatment of [BTC] Futures ETPs and spot [BTC] ETPs,” it added.

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