Earlier this week, it was reported that the United States Securities and Exchange Commission (SEC) turned down nine Bitcoin ETF proposals. The proposals came from three groups: Proshares, GraniteShares, and Direxion.
In a surprising turnaround, however, the SEC has revealed via three letters sent by secretary Brent Fields that it will be reviewing these rejections. The letters are similar in stating that “pursuant to Rule 431 of the Commission’s Rules of Practice, 17 CFR 201,431, the Commission will review the delegated action.” The letter continues, “in accordance with Rule 431(e), the August 22 order is stayed until the Commission orders otherwise. The Office of the Secretary will notify you of any pertinent action taken by the Commission.”
Hester Peirce, SEC Commissioner, tweeted about the letters on August 23rd, stating that “yesterday’s staff orders disapproving SRO rules related to a number of bitcoin ETFs are stayed pending Commission review.” She then followed up the tweet by saying “In English: the Commission (Chairman and Commissioners) delegates some tasks to its staff. When the staff acts in such cases, it acts on behalf of the Commission. The Commission may review the staff’s action, as will now happen here.”
A Summary of the Rejections
The SEC rejected the original proposals for a multitude of reasons. Prevention of manipulation and fraud were two main causes, with the group also dismissing the idea that Bitcoin markets are significant enough to regulate.
These aren’t the first rejections either. Back in July, the SEC denied the Winklevoss twins attempt at a Bitcoin ETF, the second denial to the founders of the Gemini exchange.
All of this said, it’s important to note that ETF applications are somewhat expected denials in the cryptocurrency community. This observation is supported by the fact that the cryptocurrency market failed to react to these rejections. As of this writing, the SEC has rejected every Bitcoin ETF filing, but the act of reviewing these rejections is a step forward to those in favor of the movement.