SEC stays rejection of crypto ETFs—for now
A day after it issued orders denying applications for cryptocurrency exchange-traded funds (ETFs), the U.S. Securities and Exchange Commission (SEC) said it will be reviewing its decision.
“In accordance with Rule 431(e), the August 22 order is stayed until the Commission orders otherwise,” read the letter written by SEC Secretary Brent Fields and addressed to the New York Stock Exchange, where the proposed ETFs would be traded if approved.
Hester Peirce, the lone commissioner who dissented from the ruling, tweeted about the stayed order, adding, “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.” She gave no timeline for the review.
Yesterday's staff orders disapproving SRO rules related to a number of bitcoin ETFs are stayed pending Commission review. See, for example: https://t.co/Ky9Z8t1E4q
— Hester Peirce (@HesterPeirce) August 23, 2018
In an earlier dissenting opinion regarding the Winklevoss Bitcoin Trust’s request to be placed on the Bats BZX Exchange, Peirce said, “The Commission steps beyond [its] role when it focuses… on the quality and characteristics of the markets underlying a product that an exchange seeks to list.”
In its August 22 orders, the securities regulator stated that rejecting the applications of ProShares, Direxion and GraniteShares had to do with concerns over the funds being vulnerable to fraud and manipulation, noting that its decision “does not rest on an evaluation of whether Bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”
The proposed ETFs would not only track the price of BTC but also the prices of crypto futures, already being traded in the Chicago Mercantile Exchange and CBOE Futures Exchange.
ETFs are a divisive topic among those in the cryptocurrency industry. Some say the added legitimacy would create greater demand, while others warn of added counterparty risk, which goes against the way digital currencies are to be used.
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