Bitcoin fund pulls listing plan after hitting SEC roadblock

The New York Stock Exchange’s bid to list a bitcoin investment fund has been scuttled, in a further sign that regulation remains a hurdle for financiers attempting to bring digital currencies to mainstream markets.

The NYSE’s Arca platform, the most popular US venue for listing exchange traded funds, has withdrawn an application for regulatory approval to list shares of the four-year-old Bitcoin Investment Trust, according to the fund’s sponsor Grayscale Investments.

Grayscale, which trades the Bitcoin Investment Trust “over the counter” on less formal exchanges, said in a statement that it “does not believe there have been enough regulatory developments” to prompt the Securities and Exchange Commission to approve the application.

The NYSE declined to comment.

According to regulatory filings, Arca submitted the request for approval to the SEC on behalf of Grayscale in January 2017.

The Bitcoin Investment Trust, which had holdings of the digital currency worth $800m at the end of August, allows shareholders to “gain exposure to the price performance of bitcoin”, according to Grayscale’s website.

Attempts to introduce bitcoin funds to exchanges have come amid heightened interest in digital currencies.

The soaring price of bitcoin, meanwhile, has polarised opinion between those who view it as a speculative bubble and those who see the beginnings of a revolution in financial services, facilitated by the digital currency and its underlying technology.

The price of a single bitcoin topped that of an ounce of gold in March, and it has surged from below $1,000 at the start of 2017 to over $4,000 now.

However, trading of bitcoin, a digital currency that is not governed by a central institution, typically happens on markets that are lightly regulated or unregulated. Some digital currency exchanges, such as Coinbase, have obtained formal accreditation in the form of a BitLicence issued by the New York Department for Financial Services.

The SEC had already rejected two similar applications to list digital currency funds earlier this year, before Thursday’s decision on the Bitcoin Investment Trust.

Yet applications keep coming.

ProShares, a provider of exchange traded funds, on Wednesday filed applications to launch long and short ETFs that would hold bitcoin futures contracts — even though the Chicago Board Options Exchange says futures would not be offered until late this year or early next, and are pending regulatory approval.

The SEC’s resistance is being met with persistence. The regulator has agreed to review its earlier decision to reject the listing of a bitcoin fund backed by Cameron and Tyler Winklevoss, the twins famed for a bitter battle with Facebook founder Mark Zuckerberg.

And Grayscale, which is a subsidiary of the Digital Currency Group led by Barry Silbert, also signalled it was not giving up on listing the Bitcoin Investment Trust: “Grayscale intends to continue its dialogue with the SEC and to closely monitor regulatory developments in order to be prepared to proceed . . . although Grayscale cannot predict when this will be.”

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