SEC finds spot bitcoin ETF applications lacking in details

According to reports, the U.S. Securities and Exchange Commission (SEC) has expressed dissatisfaction with the recent applications for spot Bitcoin exchange-traded funds (ETFs), even though major players like BlackRock and Fidelity have filed them.

Insiders have revealed that the SEC has deemed the applications lacking in detail, as stated in a Wall Street Journal article. This is surprising considering the number of Bitcoin ETF applications submitted this month, including those from prominent asset manager BlackRock and others.

Sources indicate that the SEC is not convinced that the applicants for Bitcoin ETFs have adequately outlined their strategies for implementing a “surveillance-sharing agreement.” This agreement aims to prevent fraudulent activities and market manipulation by requiring fund issuers to monitor trading activity, clearing activity, and customer identities. According to the SEC, none of the Bitcoin ETF applications so far have met this requirement satisfactorily.

BlackRock’s involvement in the race has caused a surge in the value of Bitcoin, prompting other major fund managers to follow suit. Fidelity, a leading American firm, submitted an application yesterday. Additional submissions have come from Invesco, Wisdom Tree, Valkyrie, and Bitwise.

Despite the strong interest from investors, a spot Bitcoin ETF does not yet exist in the U.S. due to the SEC’s ongoing reluctance to approve such products. The commission cites concerns about the potential manipulation of Bitcoin’s price as one of the main reasons for their hesitation.

However, investors are eagerly awaiting the introduction of a Bitcoin ETF as it would provide them with a way to engage with Bitcoin without directly dealing with asset custody, according to industry experts. Fidelity, in its recent application, suggests that their product would enable investors to access the crypto sector while mitigating associated risks. An ETF is an investment instrument that mirrors the value of an underlying asset, such as gold, foreign currencies, or bitcoin.

Despite these concerns, the SEC recently approved the first leveraged Bitcoin futures ETF, the Volatility Shares 2x Bitcoin Strategy ETF (BITX), which became available to investors on the Chicago Board Options (CBOE) BZX Exchange last Tuesday.

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