The United States Securities and Exchange Commission has once again refused a proposal of creating an ETF backed by Bitcoin. The NYSE Arca and Bitwise Asset Management’s proposal could not satisfy the concerns of the SEC. The SEC has concerns regarding digital currencies and systemic market exaggerations.

SEC rejects ETF proposal because of market manipulation

On Wednesday, the SEC indicated that the rejection does not depend on whether BTC has value or utility as an investment. They rather indicated that it resulted from the failure of NYSE Arca to show that the proposal was consistent with the requirements of Exchange Act Section 6(b)(5). They could also not demonstrate who would curb manipulative and fraudulent acts.

Recently CNBC’s Bob Pisani pointed at the issue of custody of Bitcoin and market manipulation as the impediments to having a Bitcoin ETF. The issue of custody is a great concern to the SEC because firms holding BTC on behalf of clients is risky. Pisani indicated that this is so because of the various crypto thefts reported in the industry. Regulation, according to the SEC, was challenging considering most exchanges transacting business are not in the US. Therefore they are prone to manipulation and market fraud.

Brian Kelly feels that crypto markets don’t need an ETF for now

CNBC’s Brian Kelly holds a different perspective, and he says that crypto markets do not need an ETF to grow. Kelly is also the CEO and founder of digital assets management company BKCM LLC. 

According to Kelly, despite most of the BTC trading occurring abroad over the past years, there is still considerable development in the US. He says with the entry of Ameritrade and Fidelity in the cryptocurrency industry users will soon be able to access BTC from conventional brokerage firms. Eventually, users will be buying BTC through brokerage accounts.