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9 Bitcoin ETFs Applications were Rejected by the SEC
Editorial Team

According to three different releases dated August 22, the SEC rejected nine applications to list and trade different Bitcoin ETFs.

The SEC predictably rejected five proposed ETFs from Direxion, two from Proshares and two from GraniteShares, according to a publication from The regulatory agency concerns over fraud and manipulation as the basic reasons for the rejection.

According to the publication, for the ProShares decision, the official deadline was August 23, while GraniteShares’s offering was slated for September 15.

For each application, the SEC stated specific reasons that led them to reject them. But all three releases agreed to the following:

“[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 noticed that none of the applications received managed to convince them that 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.

This is not the first round of rejections of ETF proposal. Last year, the agency rejected an ETF proposal from Cameron and Tyler Winklevoss, known as the Winklevoss Bitcoin Trust. In July 2018, the SEC rejected a rule change proposal the two brothers submitted after the initial rejection.

The reason stated was fear about investor protection. At the time, the regulatory body highlighted how Bitcoin was subjected to fraud and manipulation carried out from offshore markets that were unregulated.

Now, everybody is waiting for the SEC’s decision about the CBOE Bitcoin ETF proposal. According to legal experts, the SEC will probably hold off until 2019 on making a decision about the proposal. Meanwhile, CBOE has been fairly active in working with the SEC to mitigate concerns.