Bitcoin Daily: SEC Rejects Scaramucci Bitcoin Investment Fund Idea

The Securities and Exchange Commission has shot down Anthony Scaramucci’s proposal for a bitcoin investment fund over the risk posed to investors, Politico reported Thursday (Jan. 20).

Scaramucci is a financier and, for 10 days in 2017, was the communications director for former President Donald Trump. His proposal would have consisted of letting investors on the New York Stock Exchange buy shares in a fund backed by bitcoin.

It was proposed by his hedge fund, SkyBridge Capital, and investment firm First Trust, and is among the numerous funds pitched to help individuals get into speculating on bitcoin’s price without having to buy it directly.

However, this is just one of the several funds the SEC has rejected, with Chair Gary Gensler being prudish about giving the green light to them over concerns that the market is too volatile and unregulated.

The SEC has reportedly insisted that funds have to be linked to bitcoin futures contracts, a financial instrument regulated by the Commodity Futures Trading Commission reflecting the currency’s value.

The SEC’s hesitance to approve the funds has been a sticking point for crypto-friendly lawmakers and investment firms, who argue the agency might be breaking the law by holding back applications.

Reps. Tom Emmer and Darren Soto sent a letter in November to Gensler, asking that he allow investment firms to offer regulated products investing in digital assets.

Additionally, Grayscale Investments — which has applied to roll out a bitcoin exchange-traded fund (ETF), which is still pending — has said the agency’s approach is illegal.

Earlier this month, PYMNTS wrote that U.S. lawmakers on both sides have petitioned the Commodities Futures Trading Commission (CFTC) to do more to control cryptocurrencies, saying the organization is “critical” from making sure digital currencies aren’t abused or used in illegal activities.

Related: Lawmakers: CFTC Must Pay Closer Attention to Crypto

John Boozman, the panel’s top Republican, said it was “imperative” that customers not suffer fraud and abuse, and that the markets were fair. However, lawmakers have argued for months with regulators about how crypto tokens should be dealt with by the SEC.