SEC Rejects Futures Based Bitcoin ETFs

in bitcoin •  3 months ago

Another day, another bitcoin ETF rejection.

On August 22nd, the SEC ruled on several pending bitcoin ETF applications.

Just hours after this was posted:

https://steemit.com/bitcoin/@jrcornel/tomorrow-is-decision-day-for-the-next-bitcoin-etf

Specifically, the SEC ruled on the pending applications from ProShares and Direxion.

Both of which had applied for a bitcoin ETF that was based on futures products.

Their argument was that the SEC wanted ETFs to be based on regulated markets, and the Futures markets launched by the CBOE and CME are in fact regulated markets.

However, the SEC didn't quite see it that way.

Why the rejection?

According to the commentary released along with the rejection, it had to do with several things.

One being that yes, the ETFs were based on Futures markets that are regulated, but these markets are of insignificant size in regards to the whole of bitcoin trading.

They make up a very small percentage.

Basically, at the current state, the Futures markets are just too small to base an ETF off of according to the SEC.

The other main issue the SEC had was with spot markets still being largely unregulated.

The problem with an ETF based on Futures products is that those Futures products are based on a spot market that is largely unregulated.

The SEC again mentioned that the spot market is prone to fraud and manipulation as reasons they aren't comfortable accepting a bitcoin ETF application.

For this reason any Futures based ETFs are unlikely to be approved by the SEC anytime soon.

(Source: https://news.bitcoin.com/bitcoin-etf-rejections-sec-shoots-down-7-hopefuls-in-2-decisions/)

However, all is not lost.

In the long-term, as the bitcoin Futures market increase in size and other regulated financial institutions like Goldman Sachs, expand their businesses to create a major futures markets alongside CME and CBOE, it is possible that derivatives-backed ETFs receive the approval of the SEC.

Also there is still the VanEck/CBOE ETF...

It isn't entirely clear whether their application satisfies all the demands from the SEC, but they likely have the best shot of anyone at gaining approval due to their history and the way their proposed ETF would be structured.

Commentary from the SEC on that ETF is due by September 30th.

Stay informed my friends.

Image Source:

https://blokt.com/news/breaking-proshares-bitcoin-etf-denied

Follow me: @jrcornel

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Check it out, it's under review now:

https://www.reuters.com/article/us-bitcoin-etf/sec-to-review-decision-rejecting-bitcoin-etfs-idUSKCN1L82LB

Not expecting much from it, but you never know. It at least shows the SEC is more open to a Bitcoin ETF than yesterday's actions implied.

It means crypto bull over 2 months

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I hope you are right. I think it may be a while before bitcoin makes new highs, though 2 months would be very welcome.

Oh well, in time. When bitcoin rises again

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Hopefully.

we've already seen the market impacted by this. The rumor was bought, now the news is being sold in stagnation. I've never seen such uncertainty before in my almost 4 years of full-time brokering.

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Brokering? Who do you work for?

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Self-Employed. Independent. I can forward you a contract if you'd like. I've got about a dozen or so clients.

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A contract? What kind of a contract are we talking about here?

How many they can reject haha there is a line of approval waiting and once it gets approved we will see some insane pump

It's good to see that bitcoin held his ground despite of the disapproval...
ETF are going to get approved eventually, it's just a matter of time. Then would be the time of institutional money pouring in!

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Yes, that is the hope. Though it might be a while before we get a Bitcoin ETF in my opinion. Perhaps someone should submit the application for a bitcoin ETN.

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Agreed. Just like last year, the year before; and perhaps most notably 2009 (when Wall St. first denounced BTC & cryptocurrencies)

Time & Time again we've rallied & proven all skeptics wrong. If history is a barometer; than it should be no different come Q4/holidays.

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I hope you are right, though I am thinking this pullbak/bear market may be similar to what we saw in 2014-2015. If that is the case, it will be a while before we take out those previous highs.

The final date for etf is 30 sep :)

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That is the final date for comment. They can push it back at least one more time. I believe the actual date they would technically have to rule by is March-May time frame of 2019.

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it could be delayed again.. you know how it works..

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Nah. I think the SEC is taking a very cautious approach because they don't want egg on their face. If they were to approve an ETF and something goes wrong, whoever approved it is getting fired plus lawsuits etc. No reason to take on that risk for no reward on their part.

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On the flip side, it now sounds like they are getting pressured for not approving something. With the SEC now reviewing, we may see something get approved yet.

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Everything is possible man we can't say anything

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I'm actually surprised we didn't crash again

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I didn't think we would, but when they shot down all 9 all at once, I thought that might cause a bit of sell off. Not bad so far.

Its the volatility that scares the SEC. I think jrcornel's description of "egg on their face" sums it up. That's why the US requires investors to be accredited. The SEC wants to be protected from bad investments and investment mistakes. Too many people cry wolf when they lose money so being accredited means that you are secure financially and can not only accept the losses financially but it also indicates you are a bit more sophisticated. While I am a big believer in the future of crypto I do think there are too many unsophisticated individuals in it that contribute to the roller coaster volatility we see. Hand out free coins from an airdrop, see that crypto drop like a rock. Hear the slightest negativity about a project see a major dip in price. Much of this is from actions of people who can't hold $100 longer than Friday.

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Well put. I agree.

It's a terrible long time to wait for all this to happen

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I agree. It's almost gotten to the point where you just buy and forget. Check every few weeks, but other than that, live life.

@jrcornel I sent 10 steem to this account still-observer last night. This morning I got a message from a woman saying,

Hi! I noticed you sent 10 Steem to still-observer. Please don't send any amount to him again because he was caught plagiarizing photos earlier this month, and changed into his account to look like a "Whale Trail Team" bid bot. Besides, he only has 125.202 SP which means his vote has very little value (or nothing at all).

Looks like I’ve been had. I’d like other to not suffer the same fate of thieves like this if it can be helped.

Thanks

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Yes, I just checked his wallet, looks like you were not the only one to have been had. In the future make sure you do a test amount first with a very small amount of steem or sbd when using a promotion service. Always people out there trying to scam others it seems.

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Thanks for the tips. I will be more careful in the future.