Crypto Markets Cheer As Commissioner Hester Peirce Announces That SEC Will Review August 22nd Decision to Reject 9 Bitcoin ETFs

On 23 August 2018, one day after U.S. Securities and Exchange Commission (SEC) staffers rejected (via three disapproval orders) a total of nine Bitcoin ETFs proposals from ProShares, Direxion and GraniteShares, SEC Commissioner Hester Peirce (the only Commissioner who dissented from the decision last month to reject for the second time the Winklevoss Bitcoin ETF) announced that the SEC has "stayed" (or put on hold) these orders, and that it is going to review these disapproval orders.

She announced the news (around 20:26 UTC) via the following tweet:

The link in this tweet is to a letter sent by Brent Fields, the SEC's Secretary, to Eugene Schlanger, Counsel for NYSE Group. This letter, which has to do with the rejection of the five Bitcoin ETFs from Direxion, contains the following important paragraph:

"This letter is to notify you that, pursuant to Rule 43 1 of the Commission's Rules of Practice, 17 CFR 201.431 , the Commission will review the delegated action. In accordance with Rule 43 1 (e), the August 22 order is stayed until the Commission orders otherwise."

Two other similar letters, with regards to the Bitcoin ETFs from ProShares and GraniteShares, were also sent out: the ProShares letter was sent to NYSE Group just like the Direxion letter (but this time to David De Gregorio, Senior Counsel); and the GraniteShares letter was sent to Kyle Murray, Assisant General Counsel for Cbloe Global Markets

The Direxion and the ProShares letters were sent to the NYSE Group because in these two cases, the proposed rule changes came from NYSE Arca ("the top U.S. exchange for the listing and trading of exchange-traded funds"), which was going to be the exchange to list and trade the shares of the Direxion and ProShares ETFs. The GraniteShares letter was sent to Clobe Global Markets because for those two ETFs, the proposed rule change to list and trade their shares came from Cboe BZX (an exchange that is part of Cboe Global Markets).

Less than an hour after her first tweet, Commissioner Peirce sent this follow-up tweet:

It is not clear how long the Commission's review of the delegated actions will take, with all three letters ending with the following sentence:

"The Office of the Secretaty will notify you of any pertinent action taken by the Commission."

The reply to this tweet by former SEC Commissioner Michael Piwowar (who resigned last month) was quite interesting:

American lawyer Jake Chervinsky (who has been providing excellent commentary on decisions of the SEC regarding Bitcoin ETFs) agreed with Michael Piwowar, and made the following comment on Twitter:

"Don't get too excited, folks. Under Rule 431 of the SEC's Rules of Practice, it only takes a single Commissioner to order a review like this. @HesterPeirce deserves credit & respect for putting up a fight, but there's no reason to think yesterday's rejections will be reversed."

What Chervinsky is referring to is Rule 431 ("Commission consideration of actions made pursuant to delegated authority"), which you can learn more about in the SEC's "Rules of Practice" document.

As for how a futures-based Bitcoin ETF could cause the BTC price to go up, Twitter user "Nik Bhatia" offered one potential scenario: 

The return of hope of a Bitcoin ETF getting approved this year has caused crypto markets to rejoice, with Bitcoin, according to data from CryptoCompare, breaking the $6,500 resistance level, surging to an intraday high of $6,558 around 22:00 UTC, and currently (as of 22:20 UTC) trading at $6,542, up 2.7% in the past 24-hour period.

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Lightning Labs’ Lightning Wallet Desktop App Now Works With the Bitcoin Mainnet

Siamak Masnavi

On Tuesday (April 23), Lightning Labs announced the release of the first alpha version of its non-custodial Lightning wallet for the Bitcoin mainnet. This is the desktop (MacOS, Windows, and Linux) version of the app.

The first time that the world saw Lightning Lab's completely redesigned "Lightning App" (i.e. their "user-facing wallet application")  was on 10 September 2018, however that alpha release was only for use with the Bitcoin testnet.

The idea of the UX redesign was to appeal to novice Bitcoin users. In a blog post published back then, Lightning Labs described their Lightning App as follows:

"The redesigned Lightning App bundles lnd and is meant to run as a standalone wallet in light client mode (using Neutrino, BIP 157 + 158) both on desktop as well as mobile devices. By default the app will connect to a bitcoin full node cluster hosted by Lightning Labs. As Neutrino support progresses however, we will remove our hosted cluster. Optionally, users can also run their own full node and have the app connect to it if they want to. Users do not however need to run a separate lnd node. The goal is to build an application that is easily approachable and that can simply be opened with a double click."

Here were the main UX guidelines for the Lightning App:

  • "Use plain english"
  • Use "a high contrast color shift" to "distinguish between primary user actions and technical details"
  • "Limit funds per channel"
  • "Automatically handle address & invoice"
  • "Display local fiat currency by default"

As for Neutrino protocol BIP 157, BIP 158), which was proposed by "Lightning Labs’ Olaoluwa Osuntokun (roasbeef) and Alex Akselrod, along with Jim Posen (formerly of Coinbase)," it is, according to yesterday's blog post, "a light client specification that allows non-custodial Lightning wallets to verify Bitcoin transactions with improved privacy, minimized trust, and without needing to sync the full Bitcoin blockchain (which is about 200 GB)."

The main new features of version "v0.5.0-alpha" of the Lightning App compared to what was offered last September are as follows:

  • "syncing the Neutrino client is now much faster and begins in the background while the user writes down her recovery phrase (a.k.a mnemonic seed)"
  • updated home screen that "with a unified balance that includes on-chain as well as Lightning funds"
  • operation on the mainnet by default (although you can open the app in test mode)
  • "smarter autopilot"

Please note that Lightning Labs wants you to realize that this version of the app is "an early version targeted at testers" and that "there’s a risk of losing all of your funds" since "this is still very early technology." 

Finally, if you'd like to try the mobile version of the app, don't despair:

"This release... represents an important stepping stone towards mobile while we continue to invest in performance and stability. We’re working as quickly as we can to get our mainnet iOS and Android apps out soon."

 

Featured Image Credit: Photo via Pexels.com