The US Securities and Exchange Commission has rejected two ETF proposals filed by ProShares.
The company currently has about $30 billion in assets under management and filed with the SEC back in September. The exchange-traded funds would have tracked BTC futures traded on the Chicago Board of Options Exchange and traded on NYSE Arca.
Here’s a look at the key reason given for the ProShares rejection:
“This order disapproves the proposed rule change. 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, in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.
Among other things, the Exchange has offered no record evidence to demonstrate that bitcoin futures markets are ‘markets of significant size.’ That failure is critical because, as explained below, the Exchange has failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to bitcoin is necessary to satisfy the statutory requirement that the Exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”
The SEC also rejected ETF proposals from GraniteShares and Direxion today, for similar reasons. You can check out the full ProShares document from the SEC here.
Exchange-traded funds track an index or group of assets but trade like stocks, and are widely viewed as having the potential to bring a crush of institutional investors into the cryptocurrency market.
This latest rejection follows a similar denial last month, when the SEC rejected a proposal filed by Gemini founders Cameron and Tyler Winklevoss. All eyes will now be on the VanEck/SolidX Bitcoin ETF, which was recently delayed and will now receive a yay or nay from the SEC by September 30th.