The SEC has communicated its concerns to the exchanges
Nasdaq and Cboe Global Markets which filed the applications on behalf of asset
managers including BlackRock and Fidelity, the source added on Friday.
Bitcoin, which has jumped since BlackRock filed its
application on June 15, fell after the Wall Street Journal first reported the
SEC rejection on Friday. The world's largest cryptocurrency was last down 1
percent at $30.142.
The SEC, Fidelity, BlackRock and Nasdaq declined to comment
on the report, while Cboe was not immediately available.
The ETF filings by such major firms had sparked renewed
investor hopes that a bitcoin ETF would finally be approved by the SEC, and
revived interest in cyptocurrencies, which have been hit by a series of crypto
company meltdowns including the sudden collapse of exchange FTX late last year.
The SEC has rejected dozens of spot bitcoin ETF applications
in recent years, including one from Fidelity in January 2022.
In all the cases, it said the filings did not meet the
standards designed to prevent fraudulent and manipulative practices and protect
investors and the public interest.
In a bid to address these concerns, the BlackRock and
Fidelity filings proposed a surveillance mechanism aimed at preventing
manipulation, but the applicants did not name which bitcoin exchange would be
involved.
Blockchain-related stocks fell following the SEC's decision,
with Coinbase, Riot Platforms and Marathon Digital between 3 percent and 3.7
percent lower. © Reuters