The deadline for the decision on three Bitcoin ETF applications ended on the 23. August. A total of 9 products were submitted by Bethsada, ProShares, from Maryland, Granite Shares, from New York, and Direxion, from Milwaukee,. All the applications were rejected by the SEC, and the justifications show a strong trend behind your decision. This is not, however, currencies are not necessarily harmful for the introduction of Crypto-and could, in fact, have a large indirect Benefit for the awareness, education and the future introduction.
Bitcoin ETF applications
ProShares and Granite Shares have both applied for 2 products. A Bitcoin ETF and a Short Bitcoin ETF. Direxion requested five products which represent the price movement of Bitcoin. There were two for Short Trades, the Daily Bitcoin, a 1X and a 2X Bear Shares, and two for Long Trades, the Daily Bitcoin, 1.25 X, 1.5 X and 2X Bull Shares. The Bitcoin ETF of granite shares was planned for the CBOE Exchange, while the ProShares and Bull were designed Shares proposals for the NYSE Arca Exchange platform.
The fear of market manipulation
The reasons for the rejection of all three applications was similar for all of them. The SEC cited several reasons for its decision. The only, primary reason, which was formulated in all the three rejections of the SEC, similar to, identified the uncertainty behind the crypto-currency assets. It is not about the safety of the individual Coins themselves, but of the market – and value manipulation.
The reasoning of the SEC considered the failure of the exchanges on which the proposed ETFs to be traded to protect against market manipulation:
…the Exchanges have not met the requirements of the exchange act and the rules of the Commission, to demonstrate that your application with the requirements of the exchange act section 6(b)(5) coincides, in particular, the requirement that the rules of a national securities exchange must be designed so that fraudulent and manipulative acts and practices, be prevented.
The low volume of the global crypto currency markets, in comparison to other assets plays a role. The SEC highlighted the issue, particularly as it is included in the price manipulation. If a market is not large enough, or not enough liquidity, it is more for groups with large equity holdings to manipulate the market movements.
Alternatives to Long and Short Trades
Although the applications were rejected, there are still two more applications, which are examined by the SEC. These newer submissions go to different ways to Cryptocurrency legitimize as a possible exchange-traded product.
VanEck SolidX Bitcoin Trust
VanEck and SolidX submitted a joint application to their Bitcoin ETF-represented. It was on 2. Published July, and the decision was made by the SEC earlier this month on the 30. September 2018 moved.
Instead of a Bitcoin Futures hang up based Fund, the application of a physically-based model. The shares of the trust are expected to be listed on the CBOE BZX Exchange.
Bitwise Crypto Index Fund Hold 10
In October 2017 Bitwise Investments to put the world’s first crypto-currency index funds. The company proposed to the SEC an ETF that uses this Index instead of the Futures, as did the two rejected proposals. The Bitwise index funds “HOLD 10” forming a mixture, according to a certain ratio, BTC, ETH, XRP, BCH, LTC, DASH, NEO, ZEC, XMR, and ETC, weighted with a 5-year market capitalization. 24. July 2018, the Index was submitted as a “Bitwise ETF Trust” in the SEC.
We are of the opinion that this new application has many Similarities with the introduction of commodity ETFs 10 to 15 years ago. At this time, ETFs on Gold, silver, crude oil and other raw materials, as well as ETFs placed on diversified commodity indexes. Here we see many similarities.
The market perception to promote
Since the main reason for the rejection of the proposals is the manipulation of the crypto-currency market and its size overall, it is unlikely that these two proposals will be accepted. But these events are of crucial importance for the education and public awareness of the regulatory authorities.
The further commitment of these investment companies ensures fuss about the Coins and the technology as a whole. News about national or globally-traded assets, which are supported by crypto-currency, make headlines, even if these applications are rejected. She is pushing the boundaries for long-term growth and potential exchange-traded products in the future.
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This article was from English into German:
Senior IT Consultant and Crypto Enthusiast always in search of interesting news.