One River’s Spot Bitcoin ETF Proposal faces rejection from SEC

Key Takeaways:

  • SEC has only rejected Spot Bitcoin ETFs in the past.
  • The commission cited the lack of sufficient investor protections as the reason for the rejection.

The One River Carbon Neutral Bitcoin Trust is the latest addition to the list of Spot Bitcoin ETFs rejected by the U.S. Securities and Exchange Commission (SEC). The application was proposed by One River Asset Management. 

The commission commenting on the rejection stated, “when considering One River’s proposed rule change, it applied the same standard used in its orders considering previous proposals to list bitcoin-based commodity trusts”. SEC cited the proposal’s lack of sufficient investor protections as a reason for rejection. This is the same reason that has been put forth by SEC to reject other spot bitcoins. SEC rejected Ark 21Shares run by star investor Cathie Wood also citing a lack of investor protections. 

One River submitted an application for the ETF in May last year, and the SEC in March 2022 announced a delay in its decision. One River’s ETF application, however, stood different from other applications because it pledged to buy/dispose of carbon credits to account for the emissions associated with the BTC in the fund.

One look at SEC’s ETF approvals will make one reach the conclusion that the agency has a preference for ETFs that track the bitcoin futures market rather than the asset itself. SEC had approved numerous future-based bitcoin ETFs, including that Valkyrie’s, while it’s still to give the green light to even one spot bitcoin ETF. The regulatory body this year had denied Spot Bitcoin ETF applications by NYDIG and GlobalX, investment firm Kryptoin’s, VanEck, and WisdomTree, among others 

Grayscale, after being frustrated with SEC’s persistent stand on Spot Bitcoin ETF, had even resorted to threatening a file suit against the SEC if its application is denied. Grayscale recently also launched a campaign to gather public support for its application. One River Digital was established in 2020 by Eric Peters and is backed by billionaire Alan Howard, co-founder of Brevan Howard Asset Management.

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Saniya Raahath

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