SEC’s rejection of BlackRock bitcoin ETF unlikely to derail eventual approval

investmentnews.com:

Though the Securities and Exchange Commission has reportedly rejected filings for a spot bitcoin exchange-traded fund from BlackRock, Fidelity and a handful of other asset managers, crypto-enthusiasts are optimistic that the product will soon achieve approval.

The regulator informed exchanges that the filings weren’t sufficiently clear or comprehensive, the Wall Street Journal reported Friday, citing unnamed sources. While there are already ETFs on the market tracking bitcoin futures or companies that work in the cryptocurrency space, the SEC has rejected around 30 applications for an ETF that tracks the actual price of bitcoin since 2017.

Crypto-enthusiasts believe these products will increase participation in bitcoin investing by allowing investors and financial advisors to buy and sell using traditional brokerage accounts. Many hoped the backing of BlackRock, the world’s largest asset manager and provider of ETFs, represented the best chance yet for a product to reach approval.

The fact that the SEC rejected the applications in just two weeks, rather than use more of the 45-day window it has to make a decision, is actually a good sign that the agency is ready to approve the product, said Steve Sanduski, a certified financial planner who coaches and trains advisors.

Past products were rejected for worries about fraud and market manipulation, while this latest round was rejected for not providing enough information about the plans for “surveillance-sharing agreements” with a bitcoin exchange, according to the WSJ.

“By telling the exchanges exactly what was missing in their filings, the applicants will simply answer those questions and resubmit their application,” Sanduski said in an email. “This practically screams,