In a joint statement issued on March 10, SEC Commissioners Mark Uyeda and Hester Peirce criticized the commission’s decision to deny investment manager VanEck’s proposal for a spot Bitcoin trust.
The commissioners noted that the SEC had rejected every application for a spot Bitcoin trust filed in the past six years. They see a discrepancy in applying standards for Bitcoin ETPs compared to other commodity-based ETPs.
Different Goalposts for Bitcoin ETPs
The SEC denied VanEck’s proposal, stating that there is no underlying regulated market for Bitcoin and, therefore, no comprehensive surveillance-sharing agreement with a regulated market of significant size related to spot Bitcoin.
However, the commissioners argue that the SEC uses a different set of goalposts for spot Bitcoin ETPs than other commodity-based ETPs. They claim that the SEC uses a uniquely burdensome definition of “significant” in its spot Bitcoin ETP filings analyses.
The commissioners point out that the SEC has not required a connection between the spot and futures markets to be demonstrated for other commodity-based ETPs. Moreover, the term “significant” appears to be applied to liquidity and volume of the trading venue in cases that do not involve Bitcoin.
The commissioners believe that the SEC is required by law to explain any changes to its policy for approving commodity-based ETPs.
VanEck’s Application for a Spot-Linked Product
VanEck has been attempting to gain approval for a spot-linked product since 2017. However, the SEC delayed deciding on the company’s current and third application for a spot ETP for months. VanEck already has a Bitcoin futures-linked financial product.
Commissioner Uyeda released a statement in February regarding the SEC’s proposed toughening of custody rules. He stated, “This approach to custody appears to mask a policy decision to block access to crypto as an asset class.”
The SEC Commissioners’ joint statement sheds light on discrepancies in applying standards to applicants, particularly in spot Bitcoin ETPs. The commissioners see a discrepancy in the SEC’s application of standards for Bitcoin ETPs compared to other commodity-based ETPs.
They also believe that the SEC is required by law to explain any changes to its policy for approving commodity-based ETPs.
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