U.S. SEC denies Valkyrie and Kryptoin bitcoin trusts

U.S. SEC denies Valkyrie and Kryptoin bitcoin trusts. 

Two proposals to offer bitcoin exchange-traded funds were rebuffed by the U.S. Securities and Exchange Commission. This was a setback for market participants who had hoped that the agency would approve the effort after having approved futures-backed bitcoin funds in October.

The markets regulator stated that both the Valkyrie Bitcoin Fund and Kryptoin Bitcoin ETF Trust proposals to trade and list shares in the Valkyrie Bitcoin Fund were not approved due to them not meeting its standards.

The SEC stated that the proposals did not meet the criteria for being designed to prevent fraud and manipulative acts and practices and to protect investors.

In October, the SEC approved two bitcoin futures-based funds: the ProShares Bitcoin Strategy ETF (and the Valkyrie Bitcoin Strategy ETF). Both made their Wall Street debuts in the same month.

The regulator has not yet accepted an application to create a spot bitcoin ETF. The SEC denied a VanEck application to create a spot Bitcoin fund last month. Then, on Dec. 17, delayed a decision regarding a similar proposal by Grayscale Bitcoin Trust.

ETFs track stocks in a portfolio and are popular because they have lower fees. For example, an ETF that tracks Bitcoin can expose digital currency. It also saves you the hassle of purchasing it from an exchange or managing its private keys.

Stock exchanges and industry groups have sought approval from the SEC for these products for a long time.

However, they said that Gary Gensler, Democratic SEC Chair, and investor advocates are concerned about the lack of regulatory oversight and surveillance that they believe increases fraud and manipulation potential.