SEC to Decide on Fate of 9 Bitcoin ETFs
Leila Chin
Nine bitcoin-backed exchange-traded fund (ETFs) are awaiting the Securities and Exchange Commission’s (SEC) green light as the US watchdog is slated to decide on these ETF proposals in the coming weeks or months.
Based on public records, SEC officials are currently deliberating on 10 bitcoin-related funds although the bitcoin ETF backed by blockchain startup SolidX and investment firm VanEck are the only physical fund among all the applications. Aside from the SolidX-VanEck proposal, which was submitted in June, other submissions from ProShares, Direxion and GraniteShares are still pending before the American regulator.
The SEC had scheduled the deadline at the time the proposals are published in the US Federal Register, with initial decision to be promulgated within 45 days. Then, it has the discretion to delay its final decisions to about 240 days upon the publication of these filings in the federal records. The deadline to decide on two funds from ProShares is set on August 23. The rule change giving an avenue for those products was filed by NYSE Arca.
The regulator is expected to rule on bitcoin ETFs as early as September 15, the date by which two ETFs from GraniteShares will either be approved or rejected. For Direxion’s four funds, the deadline is set on September 21.
Earlier, the SEC deferred its ruling on a proposed rule form the Cboe BZX Exchange which would allow listing a bitcoin ETF. In its order issued last month, the officials said they wanted more time to deliberate on the suggestion to have such an ETF in the United States that, if approved, would become the first of its kind in the country.
“Accordingly, the Commission… designates September 30, 2018, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change,” the SEC said at that time.
Over 100 comments were submitted in the middle of July this year for the proposed rule change.
In July, the SEC upheld its March 2017 verdict affirming the rejection of the planned bitcoin ETF by investors Cameron and Tyler Winklevoss. It emphasized the decision was based on the structure of the proposal, not a judgment against blockchain and virtual currencies.
“Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because, as discussed in detail below, BZX 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 its rules be designed to prevent fraudulent and manipulative acts and practices,” the SEC explained.
“For example, existing or newly created bitcoin futures markets may achieve significant size, and an ETP listing exchange may be able to demonstrate in a proposed rule change that it will be able to address the risk of fraud and manipulation by sharing surveillance information with a regulated market of significant size related to bitcoin, as well as, where appropriate, with the spot markets underlying relevant bitcoin derivatives,” the agency added.
