The US Securities and Exchange Commission (SEC) issued a notice on Wednesday, March 13, instructing First Trust-SkyBridge to publicly announce its Bitcoin ETF application has been “abandoned”.
This move follows the SEC’s rejection of their initial application in January 2022. Since then, neither party has taken any meaningful steps to address the issue—no dismissal nor a renewed attempt to secure approval.
The SEC is ordering (in all caps) First Trust SkyBridge Bitcoin ETF to declare their filing “abandoned” today. FT was one of the filers who never jumped back in to the post-BLK race, not sure why. Had they launched prob add 15% to the flows prob as First Trust is a sales MACHINE pic.twitter.com/ruEbFvyFxC
— Eric Balchunas (@EricBalchunas) March 12, 2024
U.S. SEC Notice Source: Eric Balchunas’s X post
First Trust-SkyBridge, which was as a coalition between First Trust and SkyBridge in 2021, was among the early applicants for a Bitcoin exchange-traded fund (ETF) license. However, their application was rejected in January 2022 by the SEC over their failure to file their registration statement before communication.
First Trust-SkyBridge wasn’t the only Bitcoin spot ETF applicant to be rejected by the SEC at the time; other applicants, including Fidelity Investments, Grayscale, and Bitwise, were also rejected. The SEC’s primary reason for the decisions revolved around how susceptible the funds are to market manipulation.
Interestingly, unlike other previously rejected applicants, First Trust-SkyBridge did not reapply after BlackRock’s application and subsequent revisions. BlackRock had to include a commitment to a “surveillance-sharing agreement between exchanges” in its filing to address the SEC’s primary concerns about market manipulation.
It is still unknown why First Trust-SkyBridge didn’t reapply. Eric Balchunas, a Bloomberg ETF analyst, noted that had they reapplied, they might have contributed about 15% to the current net flows recorded by newly launched ETFs because the company was a “sales machine.”
The US SEC finally approved the first set of Bitcoin spot ETFs in January 2024 after nearly ten years of back-and-forth between the regulator and the ETF issuers. Most of these ten ETFs have been performing greatly overall, having accumulated over $20 billion worth of assets under management. Blackrock’s $IBIT and Fidelity Investments’ $FBTC have been leading the pack, with over $15.4 billion and $9.12 billion in AUM as of March 12, 2024, respectively.
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