SEC Throws Out 9 Applications for Bitcoin ETFs Citing Manipulation Concerns

bitcoin etf

The U.S. Securities and Exchange Commission once again rejected a number of proposals for bitcoin exchange-traded funds on Wednesday. The SEC through its Division of Trading and Market, disapproved five ETF applications from Direxion, two from GraniteShares, and two filed by ProShares.

The rejections came a few weeks after the regulator turned down requests by Winklevloss and Cameron, seeking to physically trade the volatile digital-currency. In a statement released yesterday, the agency raised concerns over bitcoin manipulation and fraud within the markets. The SEC used the exact same reasoning and wording in rejecting the applications.

“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.”

However, the regulator pointed out that the rejections are not based on an assessment of whether blockchain technology or bitcoin is valuable as an investment or innovation. Stakeholders within the cryptocurrency industry have been attempting to get an exchange-traded fund approved by the regulator since 2014.

Virtual-currency enthusiasts were eager to see whether the regulator would approve the applications, a move that would have sent Bitcoin price upwards. Bitcoin is currently trading at around $6,409. The agency went ahead to point out how each of the proposals failed to prove that bitcoin futures market were 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 practice,” the regulator argued.

Earlier this month, the SEC also pushed back its decision on another bitcoin ETF proposal filed by financial services firm SolidX and an investment company known as VanEck, for trading on the Chicago Board Options Exchange (CBOE).

The agency still has many other bitcoin-based applications filed by various companies, including one by Bitwise, which is seeking to track a cryptocurrencies basket.