SEC’s Blind Eye to Shopify’s Stock Manipulation Highlights Its Double Standards

There’s no denying that the crypto market has matured greatly over the last couple of years. This is best illustrated by the growth in the industry’s capitalization from $250 billion to over $2.2 trillion since Q1 2020. On the heels of this meteoric growth, many experts had projected the market to be flooded with bitcoin exchange-traded funds (ETFs) by now.

However, contrary to these expectations, the last six months have seen the U.S. Securities and Exchange Commission (SEC) repeatedly reject several applications for spot bitcoin ETFs. In this regard, the regulatory body has refused applications submitted by many mainstream entities, including NYDIG, Fidelity, First Trust, VanEck, and WisdomTree.

The Rationale Offered by the SEC

According to the SEC, all applications submitted were incomplete. The regulator pointed out that the submissions fell short of the government’s requirements. The guidelines are meant to prevent fraudulent and manipulative practices needed to protect investors.

With the SEC having tightened its regulatory noose concerning the crypto industry, many analysts believe that a spot bitcoin ETF may not be on the horizon anytime soon. On the subject, Bloomberg Intelligence analyst Eric Balchunas was recently quoted as saying:

“The fact that the SEC is disapproving faster than they needed to — we were optimistic about [BTC] futures, but we’re not confident in a 2022 approval,”

SEC’s Double Standards on Full Display?

On March 18, a minute before the New York Stock Exchange closed for the day, the price of Shopify’s stock (SHOP) witnessed multiple price swings. To elaborate, the value of SHOP shot up by $100 per share to a staggering $780 before crashing once again. At the heart of the development lay Citadel Securities, a trading firm backed by billionaire Ken Griffin, which sold the shares before the closing bell.

Despite Citadel Securities not being a licensed broker — but rather a designated market maker — the deal was allowed to be executed. This has led many pundits to question the legitimacy of the SEC’s motives since the regulator has taken an iron fist approach when it comes to the crypto industry. However, it has repeatedly turned a blind eye towards the misgivings of firms operating within the trad-fi sector.

Frustration Grows

Constant rejections by the SEC have resulted in Grayscale, the world’s largest digital currency asset manager, potentially pursuing legal action against the regulatory body.

During a recent interview, CEO Michael Sonnenshein expressed displeasure with the SEC. He noted that despite having amended his firm’s offering as per the regulator’s norms, the government agency still refuses to greenlight its proposed ETF.