US regulators have shot down BlackRock Inc (NYSE:BLK)’s plans for a spot bitcoin exchange-traded fund (ETF), deeming the world’s largest asset manager’s application for the world’s largest cryptocurrency “inadequate”.
According to a Wall Street Journal report, the US Securities and Exchange Commission (SEC) believes that BlackRock’s application falls short of surveillance-sharing obligations, which are meant to deter securities fraud and manipulation.
The SEC believes that bitcoin's price particularly is susceptible to manipulation, though the regulator has approved futures-based products in the past.
A number of major financial institutions including BlackRock and Fidelity have asked the SEC to approve spot bitcoin ETFs in recent weeks.
An ETF refers to an investment instrument that mirrors the worth of an underlying asset, in this case the world’s largest cryptocurrency bitcoin.
Regulators have consistently shot down previous applications from Grayscale, but hopes were high that major institutional players like BlackRock could effectively sway SEC chair Gary Gensler’s cold reception to the idea.
Despite the recent setback, the SEC’s comments on BlackRock’s and Fidelity’s recent filings appear more diplomatic than the animosity shown to Grayscale in the past.
Hopes remain for approval down the line, which would expose bitcoin as an asset class to billions of dollars of previously untapped investor capital.
Bitcoin entered a strong rally in the latter half of June following the surge in spot bitcoin ETF applications from Big Money institutions.
Currently changing hands at US$30,648, the BTC/USDT is over 20% higher since June 15.