Bitcoin ETFs: SEC Postpones Decision on Direxion’s Proposals Until September

Avi Rosten

The SEC (the US Securities and Exchange Commission) has said today that it has deferred its decision on approval for five bitcoin ETFs (Exchange Traded Funds) until September.

The proposals, filed by Boston-based ETF provider Direxion Investments on January 4th comprise five applications: one for an ETF directly linked to BTC price, and four related to its price variation.

The SEC's report in the Federal Register – its Daily Journal – explains that the Commission:

finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change. Accordingly, the Commission, ... designates September 21, 2018, as the date by which the Commission shall either approve or disapprove the proposed rule change.

Importantly the SEC has not made any comment with respect to the highly-anticipated decision regarding ETF proposals from VanEck and SolidX – which have generated enormous expectation in the crypto-community, as well as over 250 comments on the proposal on the SEC website. The Direxion application in contrast, at the time of writing had only two comments.

With many believing this market excitement surrounding ETFs to be behind much of the bullish activity that prompted bitcoin’s substantial rise in price in the last week and today’s push past $8,000, prominent figures believe that the time is ripe for serious institutional investment into cryptocurrency.

Mike Novogratz, founder and CEO of Galaxy Digital Capital Management, in this vein recently remarked that he believes a “herd of institutional investors” is coming towards the cryptocurrency ecosystem” adding that they are “slowly coming to the realization that blockchain will be internet or Web 3.0.”

 

Featured Image Credit: "Securities and Exchange Commission" by "Scott S" via Flickr; licensed under "CC BY 2.0"

Ripple Files Motion to Dismiss Lawsuit, Says XRP is Not a Security

  • Ripple has filed a motion to dismiss a lawsuit brought by a group of XRP investors.
  • San Francisco-based startup argues that XRP is not a security.

San Francisco-based startup Ripple has filed a motion to dismiss a pending lawsuit brought against them by a group of XRP investors, arguing that the cryptoasset is not a security. 

XRP Not a Security

According to the filing published on Sept. 19, Ripple denies that XRP is a security because “it is not an investment contract.”

The filing continues, 

Purchasing XRP is not an “investment” in Ripple; there is no common enterprise between Ripple and XRP purchasers; there was no promise that Ripple would help generate profits for XRP holders, and the XRP Ledger is decentralized.

Unlike purchasing traditional securities, such as stocks, Ripple is arguing that it has no obligation to XRP investors despite its close association with the crypto-asset. Ripple further reiterated that XRP is a currency, and should not be considered an unregistered security by regulators and lawmakers. 

In addition to arguing against XRP being a security, Ripple said the statute for the lawsuit has passed and pointed out that the company did sell XRP directly to the plaintiffs, 

Countless other XRP holders in addition to Defendants (including Plaintiff, see id.) sell XRP on exchanges, making it impossible to plausibly conclude that Plaintiff purchased an initial distribution of XRP from Defendants.

The filing stems from a lawsuit brought against Ripple in May 2018 by a group of XRP investors, who claimed the company violated state and federal securities laws. The complaint was amended in August, with the group now arguing that XRP is an unregistered security under the US Securities & Exchange Commission’s (SEC) guidelines. 

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