It’s official – after waiting for the submitted proposals to be officially handed to SEC and after reviewing them for a couple of days, the Securities and Exchange Commission (SEC) disapproved nine more Bitcoin ETF applications.
It all started when the US regulator rejected two ETFs by ProShares that would be used for tracking Bitcoin future contracts, followed by five inversed and leveraged ETFs from Direxion, and another one fro GraniteShares.
SEC cited that the applicants did not meet their requirement of designing rules to prevent these malpractices. The judgement by the Commission also mentioned that they had not revealed any evidence that proves the significant size of the Bitcoin futures market. As 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 made it clear that the technological and investment potential of Bitcoin and blockchain technology before taking its decision. The outcome rested on the failure to abide by individual sections of the Exchange Act.
As the agency cited when receiving the letter from CBOE:
“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’.”
Just like the last time when the SEC denied Winklevoss Twins’ Bitcoin ETF, the reasons mentioned are the same.
However, despite the series of disapprovals, many people are confident that SEC will approve a Bitcoin ETF soon. Also, it is evident that the outcome of Bitcoin ETFs concerns the performance of Bitcoin markets in general – which is why Bitcoin reacted, dropping 4% in just a couple of hours.
The question now is – will Bitcoin drop?
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