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The most likely candidate for a bitcoin exchange-traded fund linked directly to bitcoin isn’t likely to happen in 2021, after the U.S. Securities and Exchange Commission on Friday indicated that it won’t approve a so-called spot bitcoin ETF proposed by fund provider VanEck.

The SEC’s comments indicate that the VanEck Bitcoin ETF, which was approaching a 240-day maximum review period by the regulator, doesn’t pass the threshold for addressing concerns about possible market manipulation of the underlying bitcoin BTCUSD, -1.56% .

“The standard requires such surveillance-sharing agreements since they ‘provide a necessary deterrent to manipulation because they facilitate the availability of information needed to fully investigate a manipulation if it were to occur,'” wrote the SEC in its response to VanEck.

“We are obviously disappointed in today’s update from the SEC declining approval of our physical bitcoin ETF,” said Jan van Eck, CEO, VanEck.

“We continue to believe that investors should have the ability to gain exposure to bitcoin through a regulated investment product and that a non-futures ETF structure is the superior approach,” he said.

The SEC’s decision isn’t that surprising but crypto proponents had been holding out hope that regulators would ultimately concede to the market demand for an ETF that invests directly in bitcoin rather than one backed indirectly via bitcoin futures BTC.1, -1.97% .

The SEC declined to comment and referred to its filing.

SEC Chairman Gary Gensler has said that he is reluctant to expand crypto ETF offerings, particularly a “spot” bitcoin ETF, unless there is legislation clearly defining which regulatory agencies have control over the various crypto spaces, such as crypto exchanges.

Gensler has made the case that the bitcoin futures market is more developed and is regulated by the Commodity Futures Trading Commission, which Gensler used to run from 2009 to 2014.

Still, bitcoin professionals have made the case that using futures contracts for an ETF, rather than using bitcoin directly, confers additional costs to the end user, which could be mitigated by using the spot market.

ProShares Bitcoin Strategy ETF BITO, -1.92% , which now boasts some $1.4 billion in assets, became the first U.S. bitcoin futures exchange-traded fund last month, marking a major milestone in the crypto sector as digital assets gain greater mainstream adoption.