SEC blocks bitcoin ETF proposed by Scaramucci
Anthony Scaramucci, former director of communications for the White House and founder of SkyBridge Capital LLC, speaks during the Skybridge Alternatives (SALT) conference in Las Vegas, Nevada, U.S., on Wednesday, May 8, 2019. SALT brings together investors, policy experts, politicians and business leaders to network and share ideas to unlock growth opportunities in finance, economics, entrepreneurship, public policy, technology and philanthropy. Photographer: Joe Buglewicz/Bloomberg Credit: Bloomberg/Joe Buglewicz
A bitcoin exchange-traded fund backed by Manhasset resident and former White House communications director Anthony Scaramucci has been rejected by federal authorities.
The proposal for the First Trust SkyBridge Bitcoin ETF Trust, filed in March and amended two months later, called for tracking the current, or spot, price of the cryptocurrency, a format that the Securities and Exchange Commission has yet to endorse.
The proposal calls for buying and selling bitcoin in proportion with investments into the fund.
Scaramucci, the founder of Manhattan-based alternative investment firm SkyBridge Capital who served briefly in the Trump White House in 2017, texted that he could not comment on the regulatory action.
The fund would have been traded on the NYSE Arca exchange, advised by Wheaton, Illinois-based First Trust Advisors L.P. and subadvised by a SkyBridge unit.
The SEC ruling, dated Jan. 20, said that NYSE Arca, an all-electronic market that lists many exchange-traded funds and individual securities, had not established that it would be able to "prevent fraudulent and manipulative acts and practices."
Nor has NYSE Arca "established that it has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to bitcoin," the ruling said.
Previous proposals for spot-market bitcoin funds had been similarly rejected by the SEC.
In September, seven Fidelity Investments executives held a private meeting with SEC officials in which they lobbied for a spot market bitcoin ETF.
The Fidelity presentation cited bitcoin funds in European and Canadian markets
To date, the SEC has only approved bitcoin funds tied to the futures market, an indirect proxy for investors seeking exposure to cryptocurrency.
Those funds require SEC approval, but also fall under the scrutiny of the Commodity Futures Trading Commission.
Investors can buy bitcoin directly through exchanges like Binance, payment processor Paypal and bitcoin ATMs. The volatile cryptocurrency was up 2.4% to $37,066 Friday afternoon, still far off its 52-week high of $68,790.
Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.
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