SEC Rejects ETF Proposals From Three Companies

Yesterday, the Securities and Exchange Commission (SEC) rejected nine different proposals for bitcoin-related exchange traded funds (ETFs) from ProShares, Direxion, and GraniteShares.

Notably, all three companies were denied for the same reason. The SEC said that the companies failed to prove that their ETFs would adhere to SEC requirements and were designed to prevent fraud.

The below excerpt is from the SEC order disapproving the ProShares ETF, but the denials for Direxion and GraniteShares were worded similarly.

“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. 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(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

The rejection of these nine ETFs comes only weeks after the Winklevoss bitcoin ETF was denied – a decision SEC Commissioner Hester Peirce strongly disagreed with.