ETF proposal for BitCoin to be listed, that was pitched to the United States Securities and Exchange Commission (SEC) was rejected.
Why Was the Proposal Denied?
During a statement made on October 9th, the SEC announced that the ETF filed by Bitwise Asset Management and NYSE Arca did not assemble the essential necessities to be approved.
Particularly, regulatory agencies declared that the candidate did not meet the necessary requirements in their ETF proposal, concerning potential market exploitation and illegitimate activities. The SEC stated:
“Rather, the Commission is disapproving this proposed rule change because, as discussed below, NYSE Arca 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 Exchange Act Section6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices.'”
The decision made by the SEC appears to contradict the recent statements that the managing director and global head of research at Bitwise, Matt Hougan had to say. He stated that they were closer than ever to finally get the BitCoin approved for ETF, with optimism in the fact that Bitwise would be able to get approved for a materialized BitCoin ETF. He declared the noteworthy expansion that has emerged in crypto-currency in latest years, announcing that:
“Two years ago, there were no regulated, insured custodians in the BitCoin market. Today, there are big names like Fidelity and CoinBase [with] hundreds of millions of dollars of insurance from firms like Lloyd’s of London.”
The refusal of Bitwise’s application tracks an indirect series of impediments and requests for commentary from the SEC. In August, the supervisory body delayed its conclusion on the proposal, simultaneously with two additional crypto ETF submissions; the SEC disregarded the fact that Bitwise filed its proposal for a legislation change to U.S. securities laws in the beginning of 2019.
What is an ETF Proposal?
An ETF proposal is an application for currencies to be permitted as exchange-traded funds (ETF). This means that the currency must meet certain requirements, in order for it to function without the lag of expense and the postponement of acquiring an exceptive order. Along with an ETF proposal, the SEC decided that they would revise and withdraw certain exceptive orders that have been rewarded to ETF’s in the past, establishing the new rule under the Investment Companies Act.