U.S. SEC rejects carbon-neutral bitcoin ETF by One River

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NEW YORK, May 27 (Reuters) — The U.S. Secu­ri­ties and Exchange Com­mis­sion on Fri­day reject­ed a pro­pos­al to list and trade a car­bon-neu­tral spot bit­coin exchange-trad­ed fund (ETF) by asset man­age­ment firm One Riv­er on the NYSE Arca exchange, cit­ing con­cerns over fraud-pre­ven­tion measures.

The One Riv­er Car­bon Neu­tral Bit­coin Trust pro­pos­al by NYSE Arca, which is owned by Inter­con­ti­nen­tal Exchange Inc (ICE.N), did not meet the stan­dards for exchanges designed to pre­vent fraud­u­lent and manip­u­la­tive prac­tices and pro­tect investors and the pub­lic inter­est, the Wall Street reg­u­la­tor said.

“The Com­mis­sion empha­sizes that its dis­ap­proval of this pro­posed rule change does not rest on an eval­u­a­tion of whether bit­coin, or blockchain tech­nol­o­gy more gen­er­al­ly, has util­i­ty or val­ue as an inno­va­tion or an invest­ment,” the SEC said.

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Rather, the pro­pos­al was not approved because it did not meet the require­ment that the rules of a nation­al secu­ri­ties exchange be “designed to pre­vent fraud­u­lent and manip­u­la­tive acts and prac­tices” and “to pro­tect investors and the pub­lic inter­est,” the SEC said.

To meet its oblig­a­tions, an exchange would have to show that it has a com­pre­hen­sive sur­veil­lance-shar­ing agree­ment with a reg­u­lat­ed mar­ket of sig­nif­i­cant size relat­ed to the under­ly­ing bit­coin assets, the SEC said.

It was the lat­est in a series of rejec­tions by the mar­ket reg­u­la­tor to approve an ETF that tracks the under­ly­ing dig­i­tal asset, includ­ing those from Fideli­ty, NYDIG and Sky­Bridge ear­li­er this year.

One Riv­er intend­ed to off­set the car­bon foot­print asso­ci­at­ed with the bit­coins in its fund by pay­ing for the retire­ment of vol­un­tary car­bon cred­its equal to the dai­ly esti­mat­ed car­bon emis­sions asso­ci­at­ed with the bit­coins held by the trust, accord­ing to the proposal.

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Report­ing by John McCrank; Edit­ing by Leslie Adler

Our Stan­dards: The Thom­son Reuters Trust Principles.

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