By After nine different bitcoin exchange-traded fund rule change proposals were rejected, the United States’ Securities and Exchange Commission (SEC), was requested to provide additional comments.
Among the bitcoin exchange-traded fund (EFT) rule change proposals that were rejected included ProShares, GraniteShares and Direxion, along with market providers NYSE Arca or Cboe. Concerns surrounding the underlying future of bitcoin markets, as well as the risk that the actual spot bitcoin market is at risk of manipulation.
The agency who rejected the applications had copied their reasoning Verbatim in ProShares, GraniteShares and Direxion’s rejection rulings. In the three orders publish on August 22, the agency wrote the following in the Proshares and Direxion’s case:
“…the 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 GraniteShares rejection was paraphrased from the commission’s reasoning in the other two cases.
The rejections were given a few weeks after the SEC commissioners rejected the multi-year, proposed bitcoin EFT, from the Winklevoss twins. The SEC vouched for the agency’s decision which was made in March 2017.
It should be noted that the three cases were rejected on the grounds of uncertainty around the future of Bitcoin markets and not a fund that holds bitcoin directly, as was the case for the Winklevoss twins.
Despite this, during an interview with CoinDesk, Hester Peirce, one of the commissioners, openly reported that the move to block a bitcoin ETF is a disservice to both investors and innovators, thereby disagreeing with the SEC’s decision.
However, the SEC did acknowledge the fact that investors would gain an extra layer of protection by trading exchange-based products for bitcoin.
Literally, a day after the nine rejections were publicized, the agency reported that its leadership would revaluate their decisions.
Brent Fields, the SEC secretary, wrote to NYSE Group senior counsel, David De Gregorio, to say that
“this letter is to notify you that, pursuant to Rule 43 I of the Commission’s Rules of Practice, 17 CFR 20 I .43 1, the Commission will review the delegated action. In accordance with Rule 431 (e), the August 22 order is stayed until the Commission orders otherwise.”
Last week Thursday saw that the SEC asked for public comment on all nine proposals, designating October 26 as the due date for any new comments that the general public wishes to make, in a new filing.
Assistant Secretary Eduardo Aleman wrote that
“it is further ordered that the order disapproving [the proposed rule changes] shall remain in effect pending the Commission’s review,”
Separate to the nine EFT rule change proposals, the SEC is also considering a bitcoin ETF which was proposed by the crypto start-up, SolidX and a money management firm VanEck. It is expected that a decision on that proposal could come as early as December.
Why do you think that a day after the nine rejections were publicized, the agency reported that its leadership would revaluate their decisions? Let us know in the comments section below!
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