The U.S. Securities and Exchange Commission (SEC) issued a statement declaring the recent filing for a spot bitcoin ETF insufficient, as reported by the WSJ on Friday morning, citing sources familiar with the matter.
Following this news, the price of bitcoin (BTC) experienced a sudden drop of over $1,000, equivalent to a 3% decrease within a matter of minutes. At the time of writing, bitcoin was trading slightly above $30,400.
According to the report, the SEC has informed Nasdaq and the CBOE, the exchanges responsible for submitting spot ETF documents on behalf of various asset managers, including BlackRock (BLK) and Fidelity, that the applications lack the required level of clarity and comprehensiveness.

The issue, as the report continued, revolves around the insufficient details provided in the filing regarding “surveillance-sharing agreements” and the specific spot bitcoin exchange to be utilized. The asset managers have the opportunity to update and refile their applications, and the CBOE has indicated its intention to do so.
In previous rejections of ETF applications, the SEC has stated that the sponsor of the Bitcoin Trust must establish a custody-sharing agreement with a regulated market of significant size.
A market of significant size refers to a market where anyone attempting to manipulate the price of an exchange-traded product must trade on the same market as the underlying exchange-traded product (ETP). This agreement allows the sponsor and trading platforms to identify any potential market manipulators.


Currently, the spot bitcoin markets lack oversight from federal regulators, a situation that the Commodity Futures Trading Commission has been advocating to change for years.
“We will refrain from commenting on individual filings,” stated an SEC spokeswoman when approached by Polygon.
BlackRock’s filing for a spot ETF in mid-June played a pivotal role in driving the bitcoin price to a one-year high above $31,000, after starting below $26,000. Furthermore, the BlackRock application prompted several other asset managers, including major players like Invesco (IVZ) and Fidelity, to file for approval of their previously rejected spot bitcoin ETFs.

Spokespeople from BlackRock, Fidelity, and Galaxy, who jointly submitted an application with Invesco, have opted not to provide any comments on the matter.


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