In recent news, US SEC rejected Bitwise ETF proposal for Bitcoin. The grounds for that decision was that Bitwise and its partner NYSE Arca failed to explain how they can protect the ETF investors from market manipulation.
“Although the Commission is disapproving this proposed rule change. The Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology, has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because, NYSE Arca has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5).”
In essence, SEC is not saying that bitcoin or its underlying technology, blockchain, has no utility or it’s not innovative but rather have concerns about the manipulation that happens in the market.
Recently a lawsuit was filed against Bitfinex and Tether. The class action lawsuit alleges that Bitfinex and Tether cost crypto market $1.4T for manipulating the crypto market.
SEC might be right rejecting ETF proposals for the time being. We see that there are currently many concerns about manipulation on the crypto market. If we want an ETF aproval by SEC in the future, we first need to solve these problems.