SEC Disapproves of NYSE Arca Listing Bitcoin Trusts
Commentary by Steven Lofchie
The SEC disapproved rule changes proposed by NYSE Arca, Inc. that would allow the listing and trading of shares of Bitwise Bitcoin ETP Trust and Grayscale Bitcoin Trust under NYSE Arca Rule 8.201-E ("Commodity-Based Trust Shares"). The SEC concluded that the Exchange had not met its burden in creating a way to prevent manipulation of the underlying asset.
The SEC suggested that the Exchange could meet its requirements by implementing a "comprehensive surveillance agreement with a regulated market of significant size related to the underlying or reference bitcoin assets." The Exchange argued that it had implemented a relevant agreement and offered novel protection, but the SEC disagreed.
Commentary
While one must appreciate the Exchange's persistence, it seems fairly obvious that the SEC under Chair Gary Gensler will not approve any Bitcoin fund for listing unless it is forced to do so by a court.