The three applications were rejected on the same reasons. It is stated in the refusal notices:
“For the reasons set forth above, the Commission does not find, pursuant to Section 19(b)(2) of the Exchange Act, that the proposed rule change is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange, and in particular, with Section 6(b)(5) of the Exchange Act. IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Exchange Act, that proposed rule change … is disapproved.”
The majority of SEC’s commissioners still supports the agency’s original decision in March 2017, even though these rejections are hurting both investors and innovators.
Reference to the previous case
If you read the notices of the rejected Bitcoin ETF applications, you will find that the SEC’s reason this time is not much different from the original rejection of Cameron and Tyler Winklevoss.
However, for the three companies this time, the uniqueness of these proposals are linked to the Bitcoin futures market, rather than directly holding Bitcoin funds.
The SEC cited a letter from the Chicago Board Options Exchange (CBOE), one of the current US bitcoin futures markets.
CFE President and Chief Operating Officer recently revealed in a letter to the committee’s staff that the current bitcoin futures trading volume of the CBOE Futures Exchange and the Chicago Mercantile Exchange may not currently be sufficient to support long-term or short-term Bitcoin trading products (ETP).
At the same time, the SEC made a noteworthy point: investors can get extra protection by trading on bitcoin products based on the exchange. The SEC also believes that other factors should be considered.
The Commission acknowledges that bitcoin-based ETP trading on national stock exchanges can provide additional protection to funders compared to trading in the unregulated bitcoin spot market, but the SEC must consider this issue from a broad perspective, such as Compliance with each applicable requirement of the Transaction Act.
According to reports , the SEC said that they will review the disapproved applications.
SEC Secretary General, Brent Fields wrote in a letter to David De Gregorio, Senior Counsel of the New York Stock Exchange Group:
“This letter is to notify you that, pursuant to Rule 43 I of the Commission’s Rules of Practice, 17 CFR 20 I .43 1, the Commission will review the delegated action. In accordance with Rule 431 (e), the August 22 order is stayed until the Commission orders otherwise.”
A SEC Commissioner, Hester Peirce expressed she dissented the decision to block a bitcoin ETF as it is a disservice to both investors and innovators.
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