22 Aug Nine bitcoin ETF proposals rejected by US SEC
The US Securities and Exchange Commission (SEC) rejected nine bitcoin exchange-traded fund (ETFs) proposals from ProShares, Direxion, and GraniteShares.
The SEC used nearly identical wording in rejecting each proposal, saying in the case of Direxion’s five proposals:
“…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 ruling puts protection of investors first and foremost although the Commission 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.”
Earlier Winklevoss proposal rejected too
Several weeks earlier, the SEC also rejected a proposed bitcoin ETF from Cameron and Tyler Winklevoss who had appealed an earlier decision against their plans in March 2017.
On Aug 2, dissenting SEC Commissioner Hester Peirce said she believed regulators should not be dictating rules for technology: “From my perspective, we need to be mindful of what our role is, and it’s not to be the ones who decide which innovations and which technologies get through and which ones don’t,” Peirce told CoinDesk.
The SEC expressed concern that the bitcoin ETFs proposed do not adequately “prevent fraudulent and manipulative acts and practices.”
In commenting on the ProShares proposal in March 2018, the SEC also expressed concern about “extreme volatility and low liquidity.”
While previous applicants said blockchain technology prevents manipulation, the SEC did not agree and said evidence did not support that conclusion.
Market makers and cryptocurrency innovators will continue to submit new applications but they are going to have to meet a higher level of protection for investors before they can expect SEC approval in the future.