The SEC surprised the crypto world by deciding on the two Proshares Bitcoin ETFs along with five of Direxion and two from GraniteShares much earlier than expected. The decision was ruled not in favour of all 9 Bitcoin ETF’s which led to a shattering moment for crypto enthusiasts.
In all three statements, SEC highlighted-
“[T]he 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 statement further stated in all three judgements-
“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.”
The main reason for the unfavourable decisions was that the Exchanges had no recorded evidence that Bitcoin Futures were of significant size. It also touched on the fact that the exchanges were not able to prove how they will prevent fraudulent and manipulative acts.
An attorney who has been tweeting on the BTC ETF’s recently, ‘Jake Chervinsky’ wrote about the next Bitcoin ETF and the fact that it can be delayed.
The current VanEck/SolidX deadline is September 30, but the SEC can delay it as late as February 27, 2019.
— Jake Chervinsky (@jchervinsky) August 23, 2018
If ‘Jake Chervinsky’ does prove right, there’s not much hope to rely on Bitcoin ETF’s for crypto enthusiasts for a while.
There was a part of the crypto community who applauded the decision. Twitter user ‘Bitcoin BTC Alt Crypto’ tweeted the need for an honest ETF which holds the exact amount of Bitcoin for every fiat invested.
The SEC denying DERIVATIVE based ETFs is GOOD. Once an ETF is real and honest, meaning it buys and holds the EXACT AMOUNT of #Bitcoin #BTC for EVERY fiat dollar invested, then it will be approved. #NoPaperShenanigans
— Bitcoin BTC Alt Crypto ⚡ (@CRYPT0N1TE) August 23, 2018