After authorizing futures-backed bitcoin funds in October, the Securities and Exchange Commission (SEC) refused two plans to create bitcoin exchange-traded funds, a shock to market players who had thought the agency would approve the endeavor.

Both the plans to list and trade shares of Valkyrie Bitcoin Fund and the Kryptoin Bitcoin ETF Trust failed to fulfill the markets regulator’s threshold, according to a notification dated Wednesday.

The Valkyrie Bitcoin Fund’s clearance has been delayed many times this year, and market watchers were hoping for a positive outcome. The Kryptoin ETF was a bitcoin ETF that traded on a spot basis. This comes little over a month after the VanEck bitcoin spot ETF was rejected.

The SEC has been exceedingly reticent to approve any cryptocurrency-related investment vehicles, citing two key reasons: investor protection and market manipulation.

For investment fund providers, launching the first spot-Bitcoin ETF remains the holy grail, since such products are seen as an entry point into crypto for millions of individual investors. ProShares Bitcoin Strategy, the first Bitcoin futures ETF, garnered $1 billion in investor inflows immediately after its debut.

The SEC is scheduled to make a ruling on First Trust/proposed Skybridge’s spot-Bitcoin ETF on January 22, followed by Fidelity’s on January 27. According to Bloomberg Intelligence analyst James Seyffart, who joked in a meme picturing the SEC as the Grim Reaper knocking on First Trust and Skybridge’s door, the chances of those getting authorized are slim.

According to Bloomberg Intelligence statistics, the number of crypto-tracking investment vehicles has more than quadrupled to 80 from just 35 at the end of 2020. Assets increased to $63 billion from $24 billion at the beginning of the year.

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