The US SEC regulator rejected Bitwise’s proposed Bitcoin ETF in collaboration with NYSE Arca. In official documents, the SEC argues that the proposal does not meet the legal requirements to prevent market manipulation or other illicit activities.
The SEC states:
“The Commission rejects this proposed rule change because, as discussed, NYSE Arca has failed to perform its duties under the Exchange Law and the Commission’s Rules of Practice to demonstrate that its proposal is in accordance with the requirements of section 6 (b). ) (5) of the Exchange Law and, in particular, the requirement that the rules of a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices”.
Apparently, NYSE Arca would have been responsible for arguing that crypto market prices are not manipulated.
Market correlation
Bitwise has tried to assure the regulator that issues related to market manipulation and fraudulent activity are exaggerated, publishing a series of reports on the “real” Bitcoin market and showing that market activity has closely correlated with regulated bitcoin futures markets.
Bitwise first submitted the ETF proposal to NYSE Arca in January 2019, in an attempt to provide retail customers with a regulated bitcoin product. Rival VanEck submitted a similar proposal with SolidX and Cboe BZX, but withdrew it last month.
The SEC is still examining the latest bitcoin ETF proposal submitted by Wilshire Phoenix.
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