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SEC rejects Bitwise application for bitcoin ETF

The SEC again rejected an application for a bitcoin exchange-traded fund.

Wall Street's top regulator ruled Bitwise Asset Management Inc. and the NYSE Arca exchange's application failed to prove the Bitwise Bitcoin ETF Trust would not be subject to market manipulation or other illicit activities. While the SEC acknowledged trading a bitcoin ETF in a national exchange could provide protection to investors, it said it had to consider other requirements under the Exchange Act.

"Even if a proposed rule change would provide certain benefits to investors and the markets, the proposed rule change may still fail to meet other requirements under the Exchange Act," the SEC ruled, adding NYSE Arca failed to demonstrate its bitcoin ETF would comply with regulatory requirements.

Though SEC Commissioners have been divided on the matter, the regulator has so far rejected all bitcoin ETF applications. The Winklevoss twins' bids were denied on two separate occasions due to concerns of market manipulation and fraud. And Cboe BZX Exchange Inc. previously withdrew its application for the VanEck SolidX Bitcoin Trust.

Van Eck Associates Corp. and SolidX Management LLC recently sought a workaround, on Sept. 5 launching a limited version of a bitcoin ETF available only to "qualified institutional buyers" under SEC rules.

Despite regulatory uncertainties often surrounding cryptocurrencies, some companies have launched bitcoin futures products. Bakkt LLC launched its bitcoin futures product on Sept. 23, joining the likes of Cboe Global Markets Inc. and CME Group Inc.

However, Cboe in March said it would not add new futures contracts to its trading platform. The exchange said it plans to assess how it will continue to offer digital asset derivatives.

CME also plans to launch bitcoin options on bitcoin futures contracts in the first quarter of 2020, pending regulatory approval.