The Securities and Exchange Commission (SEC) has bitcoin exchange-traded fund (ETFs) proposals from ProShares, Direxion, and GraniteShares. The commission faced a deadline to decide on two separate bitcoin ETF proposals from ProShares, two from GraniteShares, and five from Direxion—a total of 9 proposals.
On Wednesday, August 22, SEC issued three separate orders rejecting a rule change that would have allowed the bitcoin ETFs to be listed and traded on the exchanges NYSE Arca and CBOE BZX Exchange.
According to the rejection orders, the proposals were rejected because they failed to meet the requirements of the commission. All three orders contained a section that read:
“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 SEC went on to express concerns about the crypto market manipulations. The commission argued that the bitcoin futures market, which serves as the basis for the ETFs, was not of significant size and there was no sufficient way for preventing market fraud and manipulation.
CBOE president Chris Concannon, in an interview recently, said his organization were working to meet the requirements of SEC for bitcoin ETFs. “As we chip away at their issues to make them less concerned, at some point they’ll be comfortable with an ETF,” he said, adding it plans to protect investors by insuring funds invested in bitcoin.
This latest rejection is a setback for the crypto industry which would have been boosted by an approved bitcoin ETF. At the moment, crypto markets have not shown strong reactions like we’ve seen with similar rejections I the past. SEC explained that rejection does not reflect its valuation of bitcoin as an investment:
“This order disapproves the proposed rule change. Although the Commission is disapproving this proposed rule change, the Commission emphasizes that 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.”
The race to get an approved Bitcoin ETF has been on for a while now. SEC recently rejected the proposed rule change to “Winklevoss Bitcoin Trust” after it rejected the original bitcoin ETF proposal by the twin brothers last year. The crypto community would now have to set its attention to the VanEck SolidX Bitcoin Trust ETF proposal. The SEC earlier postponed a decision on the proposal to September.