SEC Rejects Applications for 9 Bitcoin ETFs
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The SEC has said no to applications for nine different Bitcoin ETFs. Applications came from ProShares, Direxion, and GraniteShares.
The regulatory agency (predictably) rejected five proposed ETFs from Direxion, two from Proshares, and two from GraniteShares. The SEC cited concerns over fraud and manipulation as the main reasons for the rejection.
The official deadline for the ProShares decision was August 23, while GraniteShare’s offering was slated for September 15. Many were curious to see how the SEC’s decision would play out, as any sort of positive news would certainly send Bitcoin price 00 upwards.
A Flurry Of Rejections
In each report, the SEC listed specific reasons that led them to reject each application. But in all three releases, the agency wrote:
[T]he Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.
The SEC also noted how none of the applications convinced them that the Bitcoin futures market was of “significant size.” According to the SEC, this failure is important because the applications have “failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to bitcoin is necessary.”
However, the SEC did note:
Its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.
Echoes of Previous Rejections
The latest round of rejections by the SEC is nothing new to cryptocurrency enthusiasts who are excited about the idea of a Bitcoin ETF.
Last year, the agency rejected an ETF proposal from Cameron and Tyler Winklevoss, known as the Winklevoss Bitcoin Trust. In July, the SEC rejected a rule change proposal the two brothers submitted after the initial rejection.
The agency said they denied the proposal due to concerns about investor protection. At the time, the regulatory body pointed out how Bitcoin was subject to fraud and manipulation carried out from offshore markets that were unregulated.
Now, all eyes are set to wait for the SEC’s decision about the CBOE Bitcoin ETF proposal. Some legal experts think the SEC will probably hold off until 2019 on making a decision about their proposal. In the meantime, CBOE has been fairly active in working with the SEC to mitigate concerns.
What do you think about the SEC’s latest rejections? Will the commission eventually approve a crypto ETF? Let us know in the comments!
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