Rejected Again: SEC [Predictably] Denies 9 Bitcoin ETF Proposals

The hopes of Bitcoin bulls ate dust once again as the Securities and Exchange Commission (SEC) disapproved nine more Bitcoin ETF applications.

The US regulator rejected two ETFs by ProShares that would track Bitcoin future contracts, five inversed and leveraged ETFs from Direxion, and another one from GraniteShares. It continued to hold its stance against the potential fraud and manipulation of Bitcoin markets, citing that the applicants had not met SEC’s requirement of designing rules to prevent these malpractices.

The SEC judgment further mentioned that they had not received any evidence that could prove the significant size of the Bitcoin futures market, as was quoted in the ETF applications. It read:

“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.”

The SEC also cleared that it did not evaluate the technological and investment potential of Bitcoin and blockchain technology before taking its decision. The outcome solely rested on applicants’ failure to abide by individual sections of the Exchange Act.

The agency also cited a quote from the letter it received from CBOE, the US exchange offering Bitcoin futures trading. It read:

“Additionally, the President and COO of CFE, recently acknowledged in a letter to the Commission staff that ‘the current bitcoin futures trading volumes on Cboe Futures Exchange and CME may not currently be sufficient to support ETPs seeking 100 [percent] long or short exposure to bitcoin’.”
The ETF Rejection Brings No Surprise

The reasons mentioned in the SEC’s latest rejections are similar to those given at the time of Winklevoss Twins’ Bitcoin ETF disapproval – twice in a row. Only recently, the regulator had postponed its decision on the ETF by VanEck SolidX Bitcoin Trust until September 30, raising alarms for applications whose verdicts were scheduled to come before the said date.

But despite the series of disapprovals, some believe that SEC will approve a Bitcoin ETF soon.

Ali Hassan, the co-founder and the CEO of Crescent Crypto, predicts it will happen in the next 18 months.

“We do think that a product is coming soon,” he told CNBC earlier this month. “Perhaps, in the next 18 months, we’ll see a Bitcoin-only ETF.”

The outcome of Bitcoin ETFs also concerns the performance of Bitcoin markets in general. So far, the market has reacted negatively to each one of rejection as mentioned above. At the same time, the speculation of a positive outcome has historically pumped the Bitcoin value. Only today, the BTC/USD had risen by over 7 percent ahead of the SEC’s announcement.

Renowned Bitcoin evangelist, Andreas Antonopolous, on the other hand, believes Bitcoin ETFs are no good news.

“Opening up these ETFs only increase the ability of institutional investors to manipulate the prices of commodities,” he argued.

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