I find it strange that they did not accept the ETF because they could not regulate every bit of it.
How do they regulate all of the gold in the world for the GLD ETF?
By endlessly rehypothecating gold!
What is 'Rehypothecation'
Rehypothecation is the practice by banks and brokers of using, for their own purposes, assets that have been posted as collateral by their clients.
Bitcoin as collateral can't be rehypothecated! Or, if rehypothecated it will be seen immediately as it will be moved to different bitcoin address! That is their problem!