Again! SEC rejects nine Bitcoin ETF applications

Again! SEC rejects nine Bitcoin ETF applications

The United States’ Securities and Exchange Commission, SEC, has again rejected nine applications for Bitcoin exchange-traded funds, ETFs.

ETF provider Direxion proposed to list and trade five bitcoin ETFs, while GraniteShares and ProShare presented two each, all of which were rejected by the SEC.

These wave of rejection is coming on the heels of a recent rejection of the Winklevoss ETF.

The SEC said 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.

Rather, 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.

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 to satisfy the statutory requirement that the Exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.