The Securities and Exchange Commission (SEC) has issued two rejections to the proposed Bitcoin-backed exchange-traded funds (ETFs) from Direxion and ProShares.
The rejections were published following previously reported deadlines stemming from the SEC’s public approval process. Each rejection cited the same reasoning, with both the Direxion and ProShares cases specifying,
“…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.”
These rejections come just weeks after the SEC concluded a review of a separate Bitcoin ETF that was proposed by investors Tyler and Cameron Winklevoss, whose efforts had previously been backed by commissioners during an initial March 2017 decision.
In an interview with CoinDesk, SEC commissioner Hester Peirce condemned the rejection, noting that the move to block the Bitcoin ETF proved to be a disservice to innovators and investors alike.
Both rejections specified that the decision was primarily weighed on the fact that the technology lacks as an innovation and investment, though the SEC does not “rest on an evaluation of whether Bitcoin, or blockchain technology more generally, has utility or value.”
While the SEC has not approved a cryptocurrency-based ETF, it is set to provide a decision on whether to allow the listing of the Cboe VanEck/SolidX ETF backed by Bitcoin on September 30.
More: Direxion and ProShares SEC Letters
Related: Forget ETFs, a Bitcoin ETN Is Now Available to U.S. Investors
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.