US SEC Rejects Fidelity’s Bitcoin Spot ETF, as BTC Price Still Struggles

Another Bitcoin bear market and another rejected spot ETF have left market participants in a gloomy state. On January 27, the spot Bitcoin ETF proposal from investment giant Fidelity was shown red light by the Securities and Exchange Commission of the US.

SEC’s Disapproval of BTC Spot ETF

On Thursday morning, according to a newly released filing, the SEC handed down its disapproval for Fidelity’s spot ETF. Over the last few months, the regulatory body has raised concerns around cryptocurrency-related frauds, manipulation, and investor protection.

While similar concerns have been cited by the SEC for many years, they seem to have tightened their hold around crypto regulations of late. 

SEC’s disapproval of BTC spot ETF dates back to its rejection of a Bitcoin ETF proposal put forward by the Winkelvoss brothers Cameron and Tyler, owners of the Gemini exchange.

In the statement released the SEC stated that any rule change in favor of approving the ETF would not be aimed at preventing ‘fraudulent and manipulative acts and practices’ nor would it necessarily ‘protect investors and the public interest.’

Talking about the BZX exchange, the SEC added: 

“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 Section.”

That said, the regulatory body extended its deliberation window to approve or deny the offering in July and then in November following Fidelity’s application in March 2021. 

This isn’t the only spot ETF that was turned down by the US SEC, in fact, just last week, the regulatory body turned down a proposed spot ETF focused on Bitcoin from First Trust and Skybridge Capital on similar grounds. A decision on an ETF submission from Stone Ridge and NYDIG is expected by mid-March. 

The spot ETF Tussle Continues

In October 2021, SEC approved the first-ever Bitcoin futures backed ETF which was launched by ProShares trading on the New York Stock Exchange. Other approvals that followed included the Valkyrie Bitcoin Strategy ETF and the VanEck Bitcoin Strategy ETF.

The futures-ETF approval in October sent BTC’s price up by almost 25% and the positive narrative around the top crypto asset at that time also helped it reach the all-time high of $69,000 in November. 

Seemingly, however, SEC hasn’t had a good outlook towards BTC spot ETFs and in December 2021, the regulator rejected investment firm Kryptoin’s proposal to list a spot Bitcoin ETF. It has also rejected spot Bitcoin ETF proposals from WisdomTree. 

Notably, Bitcoin’s price was still below the crucial $40,000 mark as the asset traded at $36,664.37 noting 3.45% losses at press time. The recent weekend losses combined with the BTC flash crashes throughout January have affected the coin’s trajectory. BTC was down 47.13% from its all-time high at the time of writing as the king coin’s 1-year ROI vs USD noted merely +18.66%.