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The Wall Street Journal reported on Friday morning that the U.S. Securities and Exchange Commission (SEC) has deemed the recent filings for a spot bitcoin ETF as inadequate, citing sources familiar with the matter.
The announcement caused a rapid and significant drop in the price of bitcoin (BTC), with a decrease of over 3%, equivalent to a $1,000 decline, within a matter of minutes. As of the current moment, bitcoin is being traded slightly above the $30,000 mark.
In line with the narrative, the SEC has notified Nasdaq and CBOE, the exchanges responsible for submitting spot ETF applications on behalf of several asset managers like BlackRock (BLK) and Fidelity, that the applications lack clarity and comprehensiveness.
The story highlighted a key concern that the filings lacked sufficient information regarding the "surveillance-sharing agreements," specifically the spot bitcoin exchange to be utilized. As a result, the asset managers have the opportunity to revise and resubmit their applications. The CBOE confirmed to both the WSJ and CoinDesk its intention to take this course of action.
In prior rejections of ETF applications, the SEC stated that the sponsor of a bitcoin trust must establish a surveillance-sharing agreement with a regulated market of substantial magnitude, according to a statement by the SEC.
A market of considerable magnitude is characterized by the requirement for anyone attempting to manipulate the price of an exchange-traded product (ETP) to trade within the same market where the ETP is established. This arrangement enables the sponsor and the trading platform to effectively identify any individuals aspiring to engage in market manipulation.
Currently, there is a lack of federal regulatory authority overseeing spot bitcoin markets, a situation that the Commodity Futures Trading Commission has been advocating to rectify for a number of years.
"We would decline to comment on the possibility of individual filings," an SEC spokesperson told CoinCryptoUs.
BlackRock's submission of the spot ETF filing in mid-June acted as a catalyst for a significant surge in the price of bitcoin. This propelled the cryptocurrency from below $26,000 to attain one-year highs exceeding $31,000. Additionally, BlackRock's application triggered a wave of filings from various asset managers, including industry titans Invesco (IVZ) and Fidelity. Both Invesco and Fidelity resubmitted their previously rejected spot bitcoin ETFs for approval.
Representatives from BlackRock, Fidelity, and Galaxy (who filed together with Invesco) opted not to provide any comments to CoinCryptoUs.
