United States: SEC disapproves of BZX proposal to list Wise Origin Bitcoin Trust
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The SEC has disapproved of Cboe’s proposed rule change BZX (“BZX”) to list and trade shares of the Wise Origin Bitcoin Trust under BZX Rule 14.11(e)(4) (“Commodity-Based Trust Shares”) . The SEC has concluded that BZX has failed to meet its obligation to demonstrate that its proposal complies with requirements aimed at preventing fraudulent or manipulative acts.
BZX argued that a variety of means are available to prevent fraudulent and manipulative practices. BZX claimed that due to slow trading and the capital required to manipulate prices, such manipulation is difficult and unlikely. The SEC disagreed, saying the filing did not support such claims. The SEC also asserted that BZX had not disputed the presence of other sources of fraud and manipulation raised by the Commission in prior orders.
In practice, given the size of the Bitcoin market, the number of sophisticated traders who monitor this market, and the lack of insider information, the Bitcoin market is inherently much less susceptible to manipulation than the market of many others. securities. It appears that SEC Chairman Gary Gensler simply does not want to approve the listing of a Bitcoin exchange-traded fund (“ETF”). A new surveillance tool is unlikely to change its decision. The change will have to come from an exogenous event, such as political or public pressure.
The SEC’s reluctance to approve the listing of even a simple vanilla Bitcoin ETF is also proof that no digital asset entrepreneur is likely to visit the SEC and seek approval for any exemption or regulatory change. There is no reason to believe that there is a possibility of favorable action. To see generally Cabinet Comment: The treatment of utility tokens by securities law.
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