- VanEck’s Bitcoin ETF application was rejected by the SEC on Friday
- The regulator said that worries over price and trading manipulation were again behind the rejection
- The role if Tether was also highlighted, suggesting that nothing much has changed
A spot Bitcoin ETF looked as far away as ever following the rejection of the VanEck proposal last week on the basis of “fraudulent and manipulative acts and practices”, and in particular the role of Tether in Bitcoin’s valuation. The Securities and Exchange Commission (SEC) rejected the latest in a string of spot Bitcoin ETFs dating back to 2013, with the rationale falling on predictable grounds and acting as proof that the doubts over Tether continue to negatively impact the market.
SEC Worried Over “Fraudulent and Manipulative Acts and Practices”
The SEC formally rejected the VanEck Bitcoin ETF proposal on Friday, citing concerns over “fraudulent and manipulative acts and practices” in Bitcoin markets, with its decision based on a need to “protect investors and the public interest”. Such practices include worries over wash trading, which has been a problem on Bitcoin’s unregulated exchanges for years, and potential price manipulation by the whales who dominate the Bitcoin landscape.
While the SEC may have a case with the first two, let’s not forget that the allowed metals ETFs in the 2010s, which turned out to be some of the most manipulated markets in the world.
Tether Wasp Continues to Ruin the Bitcoin ETF Picnic
Another of the SEC’s concerns was the role of Tether, an entity that hovers around the crypto space like a wasp at a picnic, never actually stinging anyone but possessing the capability to bring the entire thing to a messy end. The SEC claimed that “manipulative activity involving the purported ‘stablecoin’ Tether” was a reason for their rejection of the VanEck Bitcoin ETF, which shows that while Tether may think that settling its lawsuits against the CFTC and NYDIG have allowed it to “focus on the future”, the real world thinks otherwise.
As FullyCrypto pointed out this year, the underlying concerns over Tether from regulators have not gone away and won’t do so until the coin can show that it is sufficiently backed and has no impact on Bitcoin’s price. This latter aspect is not really a concern these days, but, as we pointed out earlier this year, Tether’s reputation is now so tarnished that it will negatively impact the crypto space both internally and externally, and it is clearly an influence as far as a Bitcoin ETF goes.
