On 22 August 2018, the U.S. Securities and Exchange Commission (SEC) rejected nine Bitcoin ETF proposals: two from ProShares, five from Direxion, and two from GraniteShares. All nine of these Bitcoin ETFs were based on Bitcoin futures rather than backed by “physical” Bitcoin (as is the case with the proposed VanEck/SolidX Bitcoin ETF).

The Commission used the same language in all three disapproval orders:

“This order disapproves the proposed rule change. Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”

“… the Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission's Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange's rules be designed to prevent fraudulent and manipulative acts and practices.”

“Among other things, the Exchange has offered no record evidence to demonstrate that bitcoin futures markets are 'markets of significant size.' That failure is critical because, as explained below, the Exchange has failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to bitcoin is necessary to satisfy the statutory requirement that the Exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

Here are some of the reactions from the crypto community on Twitter:







American lawyer Jake Chervinsky provided the following analysis of the SEC’s decision:

Gabor Gurbacs, the director of Digit Assets Strategy at at VanEck/MVIS, agreed with Chervinsky’s excellent analysis, but also strongly criticized the SEC’s decision:

At press time (approximately, 23:28 UTC on 22 August 2018), according to data from CryptoCompare, BTC is trading at $6,365, down 1.61% in the past 24-hour period. Below is the one-day price chart for Bitcoin:

BTC chart after SEC rejects 9 ETFs.png

The fact that the crypto market has reacted with a yawn to today’s disappointing but unsurprising news from the SEC is a testimony to Bitcoin’s resilence, and it could be a sign that that Bitcoin has reached a bottom around the $6300-6400 support level.

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