SEC disapproves VanEck spot BTC trust product, commissioners see double standard

The United States Securities and Exchange Commission (SEC) ordered against a rule change to allow investment manager VanEck to create a spot Bitcoin Trust on March 10. Commissioner Mark Uyeda joined his colleague Hester Peirce in releasing a statement that criticized the commission’s decision not to approve the listing and trading of the financial product. 

The commissioners noted that the SEC has disapproved every application for a spot Bitcoin (BTC) trust that has been filed, amounting to almost 20 over the last six years. Its decision on VanEck “repeats the analysis that the Commission has given in each of these recent orders,” they said, but:

“In our view, the Commission is using a different set of goalposts from those it used-and still uses-for other types of commodity-based ETPs to keep these spot bitcoin ETPs off the exchanges we regulate.”

The agency argued that there is no underlying regulated market and therefore VanEck has no “comprehensive surveillance-sharing agreement with a regulated market of significant size related to spot bitcoin.” While that is a requirement applied to all exchange-traded products [ETPs]:

“It is also clear that the Commission is using a uniquely burdensome definition of ‘significant’ in its analyses of spot bitcoin ETP filings.”

The commissioners said the SEC had not required any connection between the spot and futures markets to be demonstrated for other commodity-based ETPs and “significant” seemed to be applied to liquidity and volume of the trading venue in cases that do not involve Bitcoin. The SEC is required by law to explain changes to its policy for approving commodity-based ETPs, they added.

Related: Here’s why the SEC keeps rejecting spot Bitcoin ETF applications

VanEck has a Bitcoin futures-linked financial product. It began its attempts to gain approval for a spot-linked product in 2017. The SEC delayed making a decision on the company’s current – third – application for a spot ETP for months.

Uyeda, who was nominated by U.S. President Joe Biden and appointed to his post in June, released a statement on the SEC’s proposed toughening of custody rules in February in which he stated, “This approach to custody appears to mask a policy decision to block access to crypto as an asset class.”

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