VanEck Bitcoin ETF Shot Down by SEC. Here’s What That Means for Crypto Investors.


Last month saw cryptocurrency history being made as the ProShares Bitcoin Strategy ETF (NYSE:BITO) was launched. The exchange-traded fund (ETF) filled a need on Wall Street that had been growing more apparent for years. With investors finally able to gain exposure to Bitcoin (CCC:BTC-USD) without the risk typically associated with crypto, prices shot to historic highs.

Piles of gold Bitcoin tokens stacked together.
Source: kitti Suwanekkasit /

The importance of ETFs for crypto investors wasn’t lost on anyone. And at the time of this historic debut, several other companies were already attempting to launch their own versions. Unfortunately, one company on that list recently failed to get the thumbs up from the Securities and Exchange Commission (SEC). Anyone looking for a BITO alternative won’t be able to turn their attention to the VanEck Bitcoin ETF just yet.

What Happened to the VanEck Bitcoin ETF?

In March 2021, as talk of a Bitcoin ETF heated up, the Cboe BZX Exchange filed an application with the SEC for an ETF that would track Bitcoin directly. Today, after months of deliberation, the regulatory agency confirmed that it was rejecting it on the grounds that the company behind it had “not done enough to demonstrate it could prevent fraudulent trading to protect investors.”

The VanEck Bitcoin ETF isn’t the first of its kind to face this type of verdict. Plenty of similar companies have attempted to gain approval for similar funds, but the SEC has been quick to stamp them with an X, citing the same concerns surrounding regulations and investor safety. Just after BITO got the thumbs up, though, U.S. investors got their second futures-backed Bitcoin ETF when the Valkyrie Bitcoin Strategy ETF (NASDAQ:BTF) debuted. The Volt Equity ETF (NYSE:BTCR) joined the club just two days later.

Despite predictions that it might be the first major competitor for BITO, the VanEck Bitcoin ETF has hit a roadblock. Indeed, the ETF will be going back to the drawing board for now. We’ll be seeing it again, but it may not for a while.

What It Means for Crypto Investors

Despite the recent influx of crypto ETFs, the recent regulatory failure of the VanEck Bitcoin ETF represents an underlying truth. That truth is that the system is still prone to corruption in the form of market manipulation and fraud. As crypto markets have expanded and garnered status in mainstream investment circles, regulators have worked hard to ensure proper safety for investors amid criticism from old school titans of the financial sector, such as JP Morgan Chase (NYSE:JPM) CEO Jamie Dimon.

Even as SEC Chair Gary Gensler has reiterated support for Bitcoin futures, his agency has proven that they won’t be rushing any Bitcoin ETFs to market, even if they are backed by futures. His analogy of crypto markets as the “wild west” has given investors some laughs, but it also signals that he has no intention of letting what he sees as a lawless landscape continue unchecked.

All in all, this shouldn’t worry crypto investors too much. They still have several other Bitcoin ETFs to make use of, and more will be added. Rather, they should take comfort in the fact that the ETFs they do have are deemed safe by a regulatory agency with high standards.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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