US regulators have rejected another wave of Bitcoin ETF applications as the cryptocurrency market continues to wait for an approved product.
The Securities and Exchange Commission (SEC) issued three orders rejecting a combined nine products. These included applications from ProShares in conjunction with NYSE Arca, along with Direxion and GraniteShares, the latter of which intended to list on Cboe.
The news followed a similar ruling on a bid from cryptocurrency exchange Gemini, established by brothers Cameron and Tyler Winklevoss, who are both renowned for having become two of the first Bitcoin billionaires in the world. Their own proposal to launch the Bitcoin ETF would have been listed and traded on Cboe Global Markets.
The latest announcement led to a 4% price drop in Bitcoin, and similar falls in Ethereum, Ripple and Bitcoin cash.
In all the orders, the SEC said that it “emphasises 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.”
The standout reason in the disapprovals was the exchanges not meeting their burdens under the Exchange Act, particularly, “the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”
The announcement came earlier than some had expected, but was unsurprising according to Maxim Nurov, fund manager at Black Square Capital.
“The denial of ProShares Bitcoin ETF and Short Bitcoin ETF proposals was expected,” he said. “The performance of these ETFs is linked to bitcoin futures contracts that were launched by CFE and CME less than a year ago.”
“Whether the ETF is based on future contracts or the spot bitcoin price, the SEC most likely wants a longer period of underlying market performance before they approve the first bitcoin ETF.”
An ETF would allow investors the opportunity to indirectly purchase Bitcoin as an underlying asset rather than having to purchase a physical Bitcoin.
Much like futures contracts, it is seen as a major development for cryptocurrencies and the market is keeping a close eye on developments.
VanEck SolidX Bitcoin Trust, which has previously had two applications to have its Bitcoin shares listed as ETFs rejected, has another Bitcoin ETF proposal with the SEC. This is another product Cboe would intend to list.
A decision on the approval is set to be announced in September.