Despite the ongoing wave of applications, the SEC is holding firm against mounting pressure to allow Bitcoin ETFs. Having turned down the latest Winklevoss ETF application back in July, it has now rejected ETFs from ProShares, GraniteShares and Direxion – a total of 9 ETFs from the three companies.
Breaking with recent trends, the SEC has actually announced its decision early in this situation, in a possible dig at recent criticism that it keeps unduly delaying crypto-related decisions, leaving the market in a state of flux. The two ProShares ETFs would have been listed on NYSE Arca along with the five Direxion applications. Meanwhile, the GraniteShares ETFs were for listing on CBOE. For all the applications, the SEC statement was the same:
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.
With the ProShares applications, it went on to say:
Among other things, the Exchange has offered no record evidence to demonstrate that Bitcoin futures markets are ‘markets of significant size.’ That failure is critical because, as explained below, the Exchange has 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.
Meanwhile, the VanEck ETF decision remains on hold. This could be because rather than being an application for a standard futures fund, the proposal outlines a physical model. The decision is expected on or by September 30th, although this has already been subject to delays. As it stands, the SEC is yet to approve a single ETF proposal.
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Do you think the SEC will delay, deny or accept the VanEck proposal? Will the others reapply? Let us know your thoughts.