‘A Non-Futures ETF Structure Is The Superior Approach’, Says VanEck CEO As SEC Refuses To Approve A Bitcoin Spot Fund

Key takeaways

• The SEC has turned down VanEck’s Bitcoin spot settled ETF application.
• In the rejection letter, the SEC stated that the application failed to outline proper consumer protection measures.
• The refusal is another in a string of others but the market expects the spot ETF approval next year.

The U.S Securities and Exchange Commission (SEC) has turned down VanEck’s spot-settled Bitcoin ETF application. The U.S. apex regulator released a rejection letter outlining its reasons earlier today.

The letter was particularly addressed to the CBOE BZX exchange who filed for the ETF to be listed back in March. According to the letter, the SEC does not have enough confidence in the ability of the exchange to put in place adequate investor protection and market manipulation prevention mechanisms.

The SEC also stated that the exchange does not yet demonstrate that it has “comprehensive surveillance sharing agreements with a regulated market of significant size” to enable the commission to quickly detect market manipulation in the market.

The SEC has postponed its decision on the VanEck spot Bitcoin ETF application several times this year. The CBOE in its application posed questions about the SEC’s approval of a Bitcoin futures ETF. The exchange argued that a spot Bitcoin ETF could give better investor protection than a futures ETF. However, the SEC maintains that it is considering spot ETFs under a different set of laws than futures ETFs.

The merits of a spot settled Bitcoin ETF over futures ETF have been well articulated by key market players. The latter does not offer direct exposure to Bitcoin but rather derivatives contracts that track the price of Bitcoin. Spot settled Bitcoin ETFs is the goal for the cryptocurrency market right now. According to Michael Saylor, they may be the major catalyst required for trillions of dollars to enter the Bitcoin market and drive Bitcoin to overthrow gold. 

Is an Ethereum Futures ETF on the Horizon?

It is no surprise to market participants that the SEC’s final decision on VanEck’s spot Bitcoin ETF application has been a rejection. Several market participants have already argued that a spot Bitcoin ETF may not see the light of day till next year at the earliest.

Some analysts even predict that an Ethereum futures ETF may be the next big crypto ETFs to be approved by the SEC instead of the highly demanded Bitcoin spot ETFs. This is because the SEC has shown that it is more open to futures-based crypto ETFs as it considers them to have better consumer protection potential.

However, the market is getting increasingly wary of the SEC’s reasons and arguments and thinks that investors should be given the choice to choose what is best for them in a free market. This is why they expect that the commission will allow a spot ETF to trade, especially now that futures-based crypto ETFs have been approved.

The Bitcoin market is not reacting so much to the rejection news just yet. At press time, Bitcoin was trading at around $64,574, up 2.15% in the last 24 hours. With the Taproot upgrade set to kick off, the market remains optimistic.