Once again, the US top regulator has rejected a proposal to create a bitcoin-backed ETF, citing fraud and market manipulation concerns as the basis of the rejection.

The US Securities and Exchange Commission (SEC) on Wednesday disapproved of a Bitcoin exchange-traded fund proposed by New York-based investment-management firm Wilshire Phoenix. The bid by Phoenix was initially launched in mid-2019, and the SEC’s ruling was repeatedly delayed.

In a 76-page statement released today, the agency states that the applicants failed to meet the necessary requirements, particularly those related to market manipulation and illicit activities. This is similar to the justification the SEC gave when it turned down the Bitcoin-based ETF proposals submitted by many issuers, including the Winklevoss twins.

According to the decision,

“This order disapproves the proposed rule change, as modified by Amendment No. 1. The Commission concludes that NYSE Arca has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.”

A long list of failed ETF attempts

Wilshire Phoenix Fund would have listed shares of ETF on NYSE Arca. Earlier in June, the SEC has declared that the public can comment on the proposed ETF within 21 days. After getting the public comments, the SEC can make an initial ruling within 45 days, but the agency can extend it up to 90 days.

Unlike other ETF proposals, Wilshire’s trust planned to hold positions in Bitcoin, short-term Treasury bills, and US dollars. Explaining the rationale behind this diversification, the company says it would reduce overall volatility and provide investors with exposure to bitcoin “in a manner that is more efficient, convenient and less volatile than purchasing stand-alone bitcoin,” the filing stated.

In that respect, it would have been less similar to an ETF and more like the private placement investments that are sold to accredited investors to enable them to have exposure to cryptocurrencies in traditional financial accounts.

With this latest decision, the Wilshire proposal joins the long list of failed attempts to get an ETF approved by the SEC, leaving the title for the first approved BTC exchange-traded product still empty.