US SEC to review Bitcoin ETF rejections

US SEC to review Bitcoin ETF rejections

Despite its recent rejections of Bitcoin exchange-traded funds, ETF applications by new exchanges, the US Securities and Exchange Commission insist it would review the rejections.

It would be recalled that the US SEC had yesterday delivered another damning verdict that saw the rejection of nine separate bitcoin 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 came 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.”

However, SEC secretary Brent Fields was quoted by Coindesk in a letter addressed to NYSE Group senior counsel David De Gregorio:

“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.”

“The Office of the Secretary will notify you of any pertinent action taken by the Commission,” Fields added. Similar language was used in two others letters, including another sent to NYSE Group and Cboe Global Markets.

The news was announced by commissioner Hester Peirce, who notably dissented from a decision last month that saw the SEC shoot down, for a second time, a proposed bitcoin ETF from investors Cameron and Tyler Winklevoss.

In a follow-up tweet, Commissioner Peirce explained the steps to come as the SEC moves to review the decisions.

“In English: the Commission (Chairman and Commissioners) delegates some tasks to its staff. When the staff acts in such cases, it acts on behalf of the Commission. The Commission may review the staff’s action, as will now happen here,” Peirce said.