The U.S Securities and Exchange Commission recently rejected nine Bitcoin (BTC) exchange-traded funds (ETFs). The applications were filed by three applicants.
The application were rejected just a day top the official deadline of August 23,which had been set for the BTC ETFs, which had been filed by ProShares in partnership with New York Stock Exchange (NYSE) ETF exchange NYSE Arca.
Meeting all the requirements
In a statement on why it rejected the applications, the SEC said the exchange is yet to fulfill all the legal requirements required before approval. In particular, the regulator said the company failed to demonstrate the ways in which it intends to curb fraudulent and manipulative practices. In addition to ProShares’ applications, SEC rejected five other ETF applications filed by Direxon.
Preventing manipulative practices
The SEC is taking steps to reinforce its efforts in preventing fraud, scam and other manipulative practices. According to the SEC, another reason that led to the decision is the fact that the company failed to demonstrate the future potential of the bitcoin futures market.
In a registration statement filed at SEC in March, the Proshares Fund indicated that it does not intend to invest in Bitcoin Futures Contracts through expiration. The company said that it will instead roll or close the respective positions.
In July, a similar fate befell Winklevoss, when the SEC rejected its petition seeking to overturn the regulator’s earlier decision. In its petition, Winklevoss said that crypto markets are resistant to market forces. However, in its decision to reject the application, the regulator said the company did not provide sufficient evidence to prove its claims.
The SEC delayed its decision in yet another Bitcoin ETF application in August. This application was filed by financial services company SolidX and investment firm VanEck.. The tokens were to trade on CBOE. The commission’s decision was based on the fact that the application was based on physically-backed model instead of a Bitcoin futures-based fund. This raised even more questions.
In a statement, the SEC said the decision to reject was not based on the argument on whether bitcoin or the entire blockchain technology are classified as investments or innovations.