The regulator used the same reasoning in its denial of WisdomTree’s application Thursday as it did for the VanEck Bitcoin Trust, primarily that Cboe Global Markets had not entered into a surveillance-sharing agreement or other fraud prevention measures.
Bitcoin ETF proponents have often argued that a surveillance-sharing agreement isn’t necessary because the growth of the CME bitcoin futures market and robust liquidity in the spot markets would act as a buffer against price manipulation. The SEC has so far declined to recognize that as an alternative to a traditional surveillance agreement.
The SEC has denied every request to launch a spot bitcoin ETF since the Winklevoss twins made the first application for such a product in 2013. It has instead allowed ETFs using bitcoin futures to go through, leading to the ProShares Bitcoin Strategy ETF (BITO), the Valkyrie Bitcoin Strategy ETF (BTF) and the VanEck Bitcoin Strategy ETF (XBTF) to launch in recent months.
The next spot bitcoin ETF application before regulators is the Kryptoin Bitcoin ETF Trust, which also intends to list on the Cboe Global Markets. The SEC is required to issue a final decision on that filing by Christmas Eve this year.