Yesterday saw the US Securities and Exchange Commission reject nine applications for various Bitcoin-based exchange-traded funds (ETFs). Whilst this was partly expected, Reuters is now reporting that the SEC will review its decision to deny the applications.
More specifically, the SEC’s decision to deny the ETFs argued that the nine Bitcoin funds were unsuitable to be brought to market due to not complying with requirements in the Exchange Act.
Specifically, the SEC quoted requirements relating to the market size of Bitcoin futures, stating that this could lead to manipulation of a potential Bitcoin ETF.
This is similar to the previously rejected Winklevoss-backed Bitcoin ETF, which was denied due to flaws intrinsic to the fund itself, with the SEC citing potential problems related to ”fraud and manipulative practices”.
Nonetheless, the previously rejected Winklevoss fund revealed that one of the SEC’s four commissioners, the Republican commissioner Hester Peirce, was passionately in favor of cryptocurrency ETFs.
She went so far as to post a public dissent when her colleagues denied the Winklevoss-backed ETF, and she stated that denying cryptocurrency ETFs was stifling innovation and security.
Hester Peirce was at it again today, tweeting that the SEC’s decision to review the nine Bitcoin ETFs was mainly due to the Commission previously delegating the task to review the relevant ETFs to its staff.
Moreover, the SEC constantly holds the option to review its staff’s action, which is what will now happen. There is, however, no available deadline for when this review is supposed to be finished.
Peirce also openly shared the letter which has been sent to NYSE Arca, which stated that the SEC’s rejection of the firm’s fund has now been stayed, pending the Commission’s review of the delegated action.
The mere fact that the Commission, which is led by Chairman Jay Clayton, will now review its previous denial of the nine Bitcoin ETF proposals has brought some hope to cryptocurrency community members who are eagerly awaiting the introduction of cryptocurrency ETFs.
Exchange-traded funds are investment vehicles traded on stock exchanges that allow investors, in the case of Bitcoin, to have exposure to the cryptocurrency without actually holding any Bitcoin.
Although this has been widely heralded as potentially facilitating a major influx of institutional investments, it has also faced its fair share of criticism.
The well-known Bitcoin advocate Andreas Antonopoulos recently spoke out against the notion of Bitcoin ETFs, something which Toshi Times covered, and argued that owning Bitcoin through an intermediary such as an ETF meant that one would not ”really” own Bitcoin.
Although it remains to be seen what final decisions the SEC comes to when it has reviewed its denials, staying the rejections indicates a willingness to ensure that cryptocurrency ETFs are evaluated justly.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.