The SEC rejected 9 bitcoin ETF from ProShares, Direxion and GraniteShares

[Paha87]

The U.S. securities and exchange Commission (SEC) rejected a total of nine applications for nine different bitcoin-based exchange traded funds (BTC) from three different applicants under three separate orders issued by the SEC on August 22.

The response from the SEC came a day ahead of the expected deadline, August 23, provided for bitcoin-ETF submitted by ProShares. Also, the scammer rejected seven more proposed ETFs together with the ProShares application — five more proposed ETFs from Direxion, for listing on NYSE Arca, and two proposals from GraniteShares for inclusion on the Chicago Board options exchange (CBOE).

In all cases, the SEC indicates that:

The Commission rejects this proposed change to the rules because, as discussed below, the Exchange has not fulfilled its burden under the exchange Act and the Commission's rules of practice to demonstrate that the proposal is consistent with the requirements of section 6 (b) (5), in particular the requirement that the rules of national securities comply with the prevention of fraudulent and manipulative conduct and practices.

Now, it seems the SEC is reinforcing its doubts about the inadequate "resistance to price manipulation" in the BTC derivatives market. In the case of two bitcoin ETFs from ProShares,and in two other rejections of applications, the SEC States:

The exchange has not provided any evidence to support the fact that bitcoin-based futures markets are"significant size markets". This aspect is critical as, as explained below, the Exchanges have not been able to establish that other means to prevent fraudulent and manipulative activities and practices will be sufficient, and it is therefore necessary to provide joint surveillance with a regulated market of significant size associated with bitcoin.

As noted in the statement related to futures contracts created earlier on the basis of bitcoin, upon expiration they will either be closed or the corresponding positions will be "reversed". This was specifically labeled as a potential risk for the two ETFs in question - aside from the "extreme volatility and low liquidity" attributed to both the bitcoin market and the derivatives market.

The SEC, however, separately indicates:

The Agency emphasizes that disapproval is not based on an assessment of whether bitcoin, or blockchain technology in General, has utility or value as an innovation or investment.

The SEC's refusal reflects the concerns that the Agency has already formulated in its initial rejection of the bitcoin-ETF offer from the Winklevoss brothers in March 2017, then the Agency reported:

When the spot market is not regulated, there should be significant regulated derivatives markets associated with the underlying asset with which the Exchange may enter into a data sharing agreement.

In July of this year, the SEC refused the Winklevoss brothers ' petition after abandoning the original application, in which the twins claim that the crypto markets are "uniquely resistant to manipulation." In its rejection of the application, the Agency stated that"there is no evidence of such a conclusion in the report to the Commission".

In early August, the SEC has postponed action on another application for a bitcoin ETF, this time filed by investment firm VanEck and company SolidX for trading on the stock exchange the CBOE. It is noteworthy that instead of offering the Fund on the basis of futures on bitcoin, the application contained a model with physical assets, which would raise the question of the content of spot assets.

Link to information resource - https://altstake.io/news/sec-otklonilo-9-bitkoin-etf-ot-proshares-direxion-i-graniteshares