The Securities and Exchange Commission of U.S. has expressed its rejection to the two proposals by ProShares on Bitcoin ETF. SEC has explicitly stated the grounds on which their decision has been based. Till now, Proshares Bitcoin ETF has been in the queue awaiting the approval from SEC.
The amount of assets of the company kept under management amounts to $30 billion. In September, last year the company has filed with the US regulatory authority. The exchange traded funds could have assisted in tracing and tracking the Bitcoin futures that have been traded on NYSE Arca and Chicago Board of Options.
The grounds of refusal
SEC has stated the fundamental reason that led to its refusal of the ProShares ETF. The statement says, “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.”
It further elaborates by stating, “Rather, 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, in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”
The statement continues, “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.”
The US SEC in a recent press release has also denied the Bitcoin ETF proposal presented by Direxion and Granite Shares. The rejection to these proposals are almost based on similar grounds. The function of Exchange-traded funds aligns with the trading of stocks in exchanges, however, they assist in the tracking of group of assets or index.
Prior to this current rejection, SEC has previously received proposals from Tyler and Cameron Winklevoss, the founders of Gemini, a digital asset exchange. Last month, the regulatory body has rejected those proposals as well. Since the last four years, ETF and Bitcoin industrial sector is seeking to get approval form the commission. However, twice it has been encountering refusal. A proposal from SolidX has also been denied by the body.
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