The US Securities and Exchange Commission (SEC) has rejected at least eight proposals for Bitcoin exchange-traded funds (ETFs). The decision was made yesterday on 22 August.
Two rejections were from applications filed by ProShares that would have tracked Bitcoin futures contracts — a decision made a day earlier from a 23 August deadline. However, the SEC also rejected six other proposals, decisions for which could have been postponed: one from GraniteShares and five leveraged and inverse ETFs filed by Direxion.
Brian Kelly’s lack of optimism on a 2018 decision on ETF appears to have been reflected in price action over the past few hours, with Bitcoin shedding around USD 300 or over 4% of its price after the news. It has held strong support at USD 6,400, however, and continues to trade just above that.
After two Winklevoss rejections by the SEC, the ProShares submission had been hopeful to create the long-awaited spark the crypto community has been waiting for.
But Hunter Horsley, CEO of Bitwise Asset Management, felt that deadlines may not be the kickstart that some in the industry suggest it will be:
“An SEC filing hitting a deadline is a procedural reality — it doesn’t change the odds of it getting approved, it just draws our attention to it… Just because we hit the deadline doesn’t necessarily give any indication that the SEC has changed its tune.”
Horsley’s Bitwise filed in June with the SEC for their own exchange-traded fund of 10 cryptocurrencies. He, like Brian Kelly, doesn’t think that the SEC will necessarily meet their deadlines in the ever-increasing queue. He argues:
“I think [the SEC is] being cautious. That’s their job and that’s what we would hope they would do, suggesting that the SEC has “demonstrated a great understanding of the [digital coin] space.”
They appear to have been proven wrong with this latest string of rejections, however, as at least seven of them were decided on before their deadlines
The hope is that at least one successful approval on ETF by the SEC would bring a tidal wave of institutional buyers to the market, picking up prices and moving Bitcoin in a long-awaited upward trajectory. For the hopefuls in the market, the track record so far isn’t good.
With Gemini’s failure to become the first-ever cryptocurrency ETF on a regulated exchange came other subsequent rejections by the SEC: five more applications failing in the same week as the second Winklevoss. This latest string of rejections seem to be a cementing of the SEC’s hardline stance.
That said, SEC Commissioner Hester M Pierce, responsible for the second Winklevoss rejection, has thrown a bone to the industry which investors see as positive, commenting:
“More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order.”
Although that comment comes with an element of Catch 22, or possibly chicken or egg.
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