SEC Rejects Fidelity’s Spot Bitcoin ETF

On Thursday January 27th, the SEC released a filing that rejected Fidelity’s proposed rule change to Cboe BZX Exchange to list and trade shares of Fidelity’s Wise Origin Bitcoin Trust spot ETF. This ruling comes just one week after the SEC rejected a spot bitcoin ETF application filed by the investment advisory firm First Trust and hedge fund SkyBridge Capital, making Fidelity’s spot ETF the sixth spot bitcoin ETF rejected in recent months. 

Fidelity’s original application was filed in March of 2021, but the SEC extended its deliberation window to make a decision on the application in July and in November. After multiple extensions, the SEC cited that Fidelity’s application did not aim at preventing “fraudulent and manipulative acts and practices” and would not “protect investors and the public interest.” Although in October ProShares launched the first ETF backed by bitcoin futures, multiple other company’s attempts to list a spot ETF based on the underlying bitcoin price have found themselves fighting an uphill battle. Previous attempts by VanEck, WisdomTree, Krypton, Valkyrie, and SkyBridge Capital failed and the SEC cited the same reasoning for the decision in every case. Spot bitcoin ETFs have been accepted and are popular in other countries, yet the SEC has stopped every attempt to date to list spot bitcoin ETFs on the New York Stock Exchange.

After the ruling a spokesperson from Fidelity said, “While we are disappointed by the outcome of the SEC’s deliberations resulting in today’s disapproval order, we reaffirm our belief in market readiness for a physical bitcoin exchange traded product and look forward to continued constructive dialogue with the SEC.”  At the time of this writing, the SEC is expected to reach a decision on New York Digital Invest Group’s (NYDIG) spot Bitcoin ETF and asset manager Stone Ridge Holding Group’s BTC ETC on March 16th.