ETF Watch: 2nd Bitcoin ETF Rejected By SEC

The SolidX Bitcoin Trust fared no better than the first proposed bitcoin ETF.

Yesterday, the Securities & Exchange Commission rejected a second application for an ETF that would have covered the bitcoin cryptocurrency. The SolidX Bitcoin Trust, which was to hold bitcoins as its primary asset, would have been traded on the NYSE Arca. The price of bitcoins fell nearly 1% in the hours after the news broke.

The SEC said in a published statement that the proposed product was not consistent with the requirement that “the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”

The SEC ruling further stated that the application would have to satisfy two requirements that were unfulfilled; namely, that 1) the exchange listing the products would have to have surveillance-sharing agreements with “significant markets for trading the underlying commodity or derivatives on that commodity”; and 2) those markets for trading the commodity in question must be regulated.

Earlier this month, the SEC rejected the application for the Winklevoss Bitcoin ETF (COIN) after the product sat in the regulatory pipeline for more than three years. When that happened, the price of bitcoins plunged nearly 15%, as many had expected COIN’s approval. However, this time around, there was little expectation that the product would be approved given the prior decision.

Contact Heather Bell at [email protected].