SEC Says Spot Bitcoin ETF Filings Are Inadequate

Prices of bitcoin and crypto-related stocks have surged since mid-June when BlackRock unveiled plans for an ETF that holds actual bitcoin.
Prices of bitcoin and crypto-related stocks have surged since mid-June when BlackRock unveiled plans for an ETF that holds actual bitcoin.


  • Regulator tells Nasdaq, Cboe that applications from BlackRock, Fidelity and others aren’t clear and comprehensive

The Securities and Exchange Commission said a recent wave of applications filed by asset managers to launch spot bitcoin exchange-traded funds are inadequate, according to people familiar with the matter.

The agency informed exchanges Nasdaq and Cboe Global Markets, which filed the applications on behalf of asset managers including BlackRock and Fidelity Investments, that they aren’t sufficiently clear and comprehensive, the people said. The exchanges or asset managers can update them to address the regulator’s feedback and refile. Cboe updated and refiled its applications Friday afternoon to address the regulator’s feedback.

Prices of bitcoin and crypto-related stocks have surged since mid-June when BlackRock unveiled plans for an ETF that holds actual bitcoin. The cryptocurrency has climbed about 20%, rising above $30,000 for the first time since April. Shares of Coinbase Global, which is listed as the custodian for the BlackRock fund’s holdings, have soared more than 30% over the same period.

Bitcoin’s dollar value fell 5% after The Wall Street Journal first reported the SEC’s decision, before rebounding slightly.

A wave of traditional and crypto asset managers followed in BlackRock’s footsteps. Fidelity Investments, Cathie Wood’s Ark Investment Management, Invesco, WisdomTree, Bitwise Asset Management and Valkyrie all reactivated or amended their applications for a spot bitcoin ETF in recent days.

An ETF that tracks the actual price of bitcoin would mark a watershed moment for the industry because it would provide wider access to the cryptocurrency. It would allow investors to buy and sell bitcoin through a brokerage account as easily as shares of stock.

The SEC has repeatedly rejected such funds going back to 2017 on the grounds that they are vulnerable to fraud and market manipulation. At least half a dozen ETFs that own bitcoin futures are already on the market.

Investors and analysts viewed the bid by BlackRock, the world’s largest money manager, as the best hope yet for a spot bitcoin ETF, partly because of its near-perfect record seeing applications through.

Some industry watchers predicted that BlackRock’s filing would appease the SEC’s concerns through an agreement to share “surveillance" of a spot bitcoin-trading platform with Nasdaq, which would list the ETF.

Fidelity and Ark also included similar language about a “surveillance-sharing agreement" with the Cboe, which would list their ETFs.

Yet the SEC told the exchanges that it returned the filings because they didn’t name the spot bitcoin exchange with which they are expected to have a “surveillance-sharing agreement" or provide enough information about the details of those surveillance arrangements.

Cboe refiled applications Friday afternoon for spot bitcoin ETFs on behalf of Fidelity, WisdomTree, VanEck, Invesco and Ark Investment Management, specifying that it expects to enter into surveillance-sharing agreements with Coinbase.

Nasdaq has yet to refile an application for BlackRock but is also expected to enter into such an agreement with Coinbase, according to a person familiar with the matter.

Representatives for the SEC, Nasdaq, BlackRock, Fidelity, Invesco, WisdomTree and Ark declined to comment.

Refiling the applications resets the clock and sets asset managers back at least seven days in the competitive race to launch the first spot bitcoin ETF.

After an exchange or asset manager resubmits an application, the SEC has 15 days to put the filing out for public commentary, during which it can return the filing to them again by the seventh day. After the 15-day period ends, the SEC has up to 240 days to either approve or reject the filing.

The agency is also locked in a legal battle with Grayscale Investments. The crypto-asset manager sued the SEC in June 2022 after it rejected its bid to convert the Grayscale Bitcoin Trust into a spot bitcoin offering. Grayscale has said it expects a verdict in the fall, though a ruling could come sooner.

Some analysts say Binance’s dominance in the market for spot and futures trading hurts the chances of approval for a spot bitcoin ETF.

“Given the logic that the SEC has used up till now, Binance needs to go bust, and kosher venues need to take its place, before a U.S. bitcoin ETF gets approved, because it’s only then that a majority of bitcoin trading will migrate to venues that tick both the SEC’s ‘regulated’ and ‘significant’ requirements," John Paul Koning, a financial writer, said in a recent blog post.

The SEC sued Binance, the world’s largest cryptocurrency exchange, in early June alleging the overseas company operated an illegal trading platform in the U.S. and misused customers’ funds. A day later, it sued Coinbase saying it violated rules that require it to register as an exchange and be overseen by the federal agency.

Write to Vicky Ge Huang at

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