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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Tim Draper Calls Indian Government “Pathetic and Corrupt” Over Bitcoin Ban

  • Tim Draper calls the Indian government "pathetic and corrupt" over a proposed ban on cryptocurrency.
  • Unofficial drafted bill has emerged online making the use of cryptocurrency punishable with 10 years in prison.

American billionaire investor Tim Draper has called out the Indian government over its purported plan to ban bitcoin and all forms of cryptocurrency. 

Proposed Bitcoin Ban

On July 14, blockchain lawyer Varun Sethi published to Twitter an unofficial draft of a bill circulating the Indian government that would ban the use of cryptocurrency. 

In addition to prohibiting the use of bitcoin, the bill seeks to impose a 10-year prison sentence on Indian citizens who “mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies.” The bill does allow one caveat for the digital rupee, which is a token issued and backed by the Reserve Bank of India (RBI). 

Pathetic and Corrupt

In response to the proposed ban, Tim Draper took to Twitter to vent his feelings against the Modi government. 

Draper, who is known for his massive investments in Baidu, Skype, and Tesla, has become a bitcoin bull over the years, in addition to issuing some of the more far-fetched price predictions.

The American investor has also been an active presence encouraging developing countries to consider the benefits of bitcoin and digital currencies. More recently, he advocated the utility of bitcoin to the Argentine government, a country that has been combating fiat hyperinflation for years. 

Others Weigh In

Other high profile individuals have voiced their disapproval over the Indian government considering a bitcoin ban, including Barry Silbert who predicted the decision having the opposite effect on bitcoin adoption. 

John McAfee also chimed in with his belief that governments have little control over the use of bitcoin. 

Supporters of the Ban

However, not everyone took kindly to Draper’s harsh criticism of the Modi government. Given the rise in cryptocurrency-related scams over the past two years, some Indian citizens believe banning bitcoin will be a net positive for the country. 

While Draper may be stirring national sentiment related to cryptocurrency, it’s worth noting that the Indian government has yet to impose a ban of any sort. However, given the amount of rhetoric over the last several months and the more recent emergence of the drafted bill, it appears the Modi government is indeed contemplating decisive action against bitcoin and digital currencies.