Some rejections have been recently issued against new Bitcoin ETF proposals by the Securities and Exchange Commission (SEC). As per reports the proposals to launch a new Bitcoin exchange-traded fund (ETFs) from companies including ProShares, GraniteShares, and Direxion have been rejected.
The three companies published orders dated August 22nd, 2018 and shortly received rejections followed by the earlier deadlines reported, emerging from the public approval process of the SEC’s. Surprisingly, the agency used the same wording and reasoning of the aforementioned in all of the three applications and their rejections.
In case of the proposal submitted by ProShares, the agency mentioned:
“..the Commission is disapproving the proposed application as it fails to meet the necessary requirements of demonstrating its abiding requirements with the Exchange Act, under sections 6(b)(5) of the Exchange Act and Commission’s Rules. The company even fails to demonstrate over a particular requirement which falls coherent with the national (safeguards) security exchange rule of being able to prevent and avoid frauds and manipulations present in any of the practices or services of the organization.”
A similar language was used in the proposal rejection of Direxion’s five ETF applications:
“..the application is being disapproved by the commission as it fails to meet the necessary requirements of demonstrating its abiding requirements with the Exchange Act, under sections 6(b)(5) of the Exchange Act and Commission’s Rules, especially failing to demonstrate over a particular requirement which falls coherent with the national (safeguards) security exchange rule of being able to prevent and avoid frauds as well as manipulation present in any of the practices or services of the organization.”
Similar articulation is seen in the rejection of application proposed by the GraniteShares as well:
For people who have read the earlier disapproving orders would relate to coherency and observe the similar usage of phrases. The rejection orders sent out in the past struck very similar to explanations used to reject the proposal from investors Cameron Winklevoss and Tyler twice, corresponding to their application submitted for a new Bitcoin ETF.
However, the companies who brought in their proposals were totally unique. Their applications had a great R&D and thought given to it. In their proposal, they explained ways to tie the market with futures with Bitcoin as an additional application and not solely as a fund that holds Bitcoin directly.
The agency went on stating that the present volumes Bitcoin which is being traded might be insufficient and incapable of supporting the ETPs which seek directly 100 percent exposure whether short or long for Bitcoin.
The various contradicting points urged the applicants to point out the discrepancies of reasoning out.
The agency then added, “The commission has to ensure the benefit line pertaining to a bigger context with a crosschecking done on all requirements whether or not they met by the applicants under the sections present in the Act of Exchange.”