US regulators have rejected a bid to list and trade a carbon neutral spot bitcoin exchange-traded fund (ETF) due to insufficient fraud-prevention measures.
Asset management firm One River sought to list on the NYSE Arca exchange, but the Securities and Exchange Commission ruled the ETF did not meet standards designed to protect investors and the public interest.
A bitcoin exchange-traded fund (ETF) lets traders gain exposure to bitcoin on a traditional stock market, without the need to buy or sell the digital asset on a cryptocurrency exchange.
“The commission emphasises 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.
The commission said the carbon neutral ETF was rejected 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”.
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.
- Reuters, with additional editing by George Russell