SEC Evaluates Insufficiency of Blackrock's Spot Bitcoin ETF and Other Applications

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The U.S. Securities and Exchange Commission (SEC) has reportedly cast doubt on the adequacy of Blackrock's application for a bitcoin exchange-traded fund (ETF), as well as several other ongoing spot bitcoin ETF registrations, anonymous sources familiar with the matter revealed.

In response to Blackrock's submission, numerous companies swiftly followed suit, seeking approval for similar products. Although the SEC has granted authorization for bitcoin futures ETFs, including a newly sanctioned leveraged option, the regulatory body has so far refrained from endorsing spot bitcoin ETFs.

Insiders cited by Wall Street Journal reporter Vicky Ge Huang have disclosed that the latest registrations, including Blackrock's ETF, fail to meet the rigorous standards set by the SEC.

According to the WSJ report, the SEC has communicated its findings to Nasdaq and Cboe, the two firms responsible for submitting the ETF registrations on behalf of Fidelity and Blackrock. While a spokesperson from Cboe has stated their intent to revise and resubmit the registration to meet the SEC's requirements, Nasdaq declined to comment on the matter.

Ge Huang's sources indicate that the submitted applications for the ETFs lack clarity and comprehensiveness, leading to the SEC deeming them inadequate.

The growing interest in spot bitcoin ETFs is evident through the array of firms that have already filed their submissions, including Blackrock, Bitwise, Valkyrie, Invesco, Fidelity, Ark Investment, and Wisdomtree.

Furthermore, Grayscale Investments, the world's largest manager of digital currency assets, has been striving to convert the Grayscale Bitcoin Trust into a spot bitcoin ETF. However, the SEC rejected Grayscale's application, prompting the company to take legal action against the regulatory body.

The SEC's decision-making process sheds light on its concerns regarding market manipulation. In the case of the Fidelity Wise Origin Bitcoin Trust's denial last year, the SEC cited the inability to "prevent fraudulent and manipulative acts" or "protect investors" as the primary reasons for rejection.

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