On January 15, 2020, San Francisco-based cryptocurrency asset manager Bitwise withdrew its Bitcoin ETF proposal despite reiterating its commitment to delivering the fund just weeks ago.
According to a note published today by the SEC, the Bitwise Bitcoin ETF Trust requested the withdrawal of its registration statement, which was initially filed back in January 2019.
The company has reportedly told the SEC it has made this decision in order to be “consistent with the public interest and protection of investors.”
Matt Hougan, Bitwise’s global head of research at Bitwise, remarked:
“We did indeed withdraw the application. This is a procedural step, and we intend to refile our application at an appropriate time.”
Bitwise first filed its Bitcoin ETF proposal back in January 2019. However, the regulator rejected the application in October and, in the following month, said it would reconsider the proposal at an unspecified date.
Market Manipulation Still a Stumbling Block
The main reason for the SEC’s unwillingness to allow Bitcoin ETFs is its concern over market manipulation.
In fact, Jay Clayton, the chairman of the SEC, publicly stated that he didn’t see a pathway to a Bitcoin ETF until concerns over market manipulation were addressed.
The pathway to BTC ETFs is murky at best as the SEC’s reluctance to allow cryptocurrency firms to make real progress continues to be apparent. The regulator seems to be stifling the development of cryptocurrency projects through stringent measures.
This also indicates that the SEC is toeing the line of U.S. lawmakers in Congress to deter crypto adoption. The current Keep-big-tech-out-of-finance act that intends to keep corporations like Facebook out of the crypto space is one example.
Despite Bitwise’s notable efforts to address the SEC’s questions over market manipulation, the regulator remains concerned. Not even a detailed report on the decline in counterfeit trading volumes on top crypto exchanges was enough to change the SEC’s stern approval requirements.
Bitwise Not an Isolated Case
Bitwise is far from the only firm to propose a Bitcoin ETF to the SEC. There have been at least a dozen applications from the likes of CBOE and Gemini to ProShares and Direxion. However, they have all been rejected or withdrawn.
The Bitwise withdrawal follows that of VanEck/SolidX in September of last year. It seems that those waiting anxiously for a Bitcoin ETF approval probably shouldn’t hold their breath.