This Thursday, on the 23rd of August, U.S. SEC or Securities and Exchange Commission released an announcement, in which it said that nine Bitcoin exchange-traded fund or ETF disapproval orders are about to stay until some further review.

SEC will reconsider the three rejections made by the U.S. regulator’s staff

In a series of letters, referencing the Rule 431 of the Rules of Practice of the Commission, the Securities and Exchange Commission said that it is going to reconsider the three rejections which were made by the U.S. regulator’s staff.

But, what it actually means when the Commission says that it is going to review the disapproval orders? And what suggestions does that decision have for the recommended Bitcoin ETFs themselves?

As the Rules of Practice of the Commission state, the Commission may conclusively affirm, reverse, modify, as well as set aside or remand for some further proceedings, in whole or only in part, which technically means that the end of this batch of Bitcoin ETFs is not final.

In one report from recently, the defense and litigation lawyer of Kobre and Kim LLP,  Jake Chervinsky, stated that the petition for review was likely initiated by a member of the Commission. This was because there was no sign on the web page of SEC which points to action taken by both of the two exchanges which are responsible for the ETF filings – the Chicago Board Options Exchange or CBOE, as well as the New York Stock Exchange or NYSE.

The Bitcoin ETF of Cameron and Tyler Winklevoss was denied in March 2017

However, it only takes the vote of one of the Commission member to start a petition for review, and as the Rules of Practice indicate, once granted, the Commission shall set forth the time within which any part or another person may file a statement supporting or opposing the action which was made by the delegated authority.

With further giving comments about this, as Jake pointed out, the specific body which is responsible for gathering the additional information, and ultimately setting the record straight is now the three SEC commissioners, as well as the chairman Jay Clayton.

Probably, one thing which looked like the most notable one was that the SEC leadership has recently issued a decision following a separate review of a past Bitcoin ETF rejection for the proposal by the investors Cameron and Tyler Winklevoss.

The Bitcoin ETF of the brothers Winklevoss has actually been denied initially in March 2017, seemingly ending a multi-year effort to make a physically backed Bitcoin fund into which investors would have the capability to buy stakes.

After the staff of SEC opposed to this idea, the Bats BZX exchange, which is the one that has filed the proposed rule change permitting for the Bitcoin ETF, petitioned for a review.

After one year or more after the review started, the commissioners of SEC decided that the ruling to disapprove would not be overturned, affirming that BZX did not meet its burden under the Exchange Act, and the Rules of Practice of the Commission in order to expose its offer is consistent with the conditions of the Exchange Act Section 6(b) (5).

Hester Pierce disagrees with the outcome of the review

During that period, the commissioner of SEC, named Hester Pierce, wrote a letter of dissent in which she disagreed with the outcome of the review.

Her arguments, saying that the SEC has to be focused on disclosure rather than on playing ‘gatekeeper’ to the market, are probably going to be raised again during the deliberations on the current set of Bitcoin ETF proposals which are put forth by Direxion, GraniteShares, as well as ProShares.

Chervinsky affirmed that some reviews from the past also took anywhere between six to 16 months, and the Rules of Practice don’t set a strict deadline for the SEC, making it some kind of hard to predict how long the particular review from now is going to take.

In one report, he said that given the nature of the decision from recently and the fact that the commissioners handled the Winklevoss appeal, he does not think that it is going to take longer to finish this review.

No matter what, the announcement of the review was mostly well-received by some individuals like the CEO of GraniteShares, named Will Rhind, whose firm is now among those that wait for a final answer from the highest ranks of SEC.

Rhind stated that it is a positive development and they are looking forward to engaging with the commissioners of SEC on this matter.


Please enter your comment!
Please enter your name here