The SEC rejected a Cboe BZX Exchange ("BZX") proposal to list and trade shares of the VanEck Bitcoin Trust.
The SEC stated that it assessed whether (i) the proposal contravened investor protections and the public interest; (ii) BZX had in place a "comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets" (in order to identify and investigate potential misconduct); and (iii) BZX had other measures in place to prevent fraudulent and manipulative activity.
In its Order, the SEC explained that it rejected the proposal because BZX did not sufficiently demonstrate that, pursuant to Exchange Act Section 6(b)(5) ("Determination by Commission Requisite to Registration of Applicant as a National Securities Exchange"), its rules were "designed to prevent fraudulent and manipulative acts and practices" and to "protect investors and the public interest" with respect to trading shares of the VanEck Bitcoin Trust. The SEC asserted that BZX's proposal mirrored assertions made in other proposals that the SEC has evaluated and rejected.
The SEC underscored that its rejection of the proposal should not be construed as an assessment of whether blockchain technology is a valuable innovation or investment.
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