🏛 [Analysis] What the SEC rejection of pending derivative-backed ETFs mean – Jake Chervinsky
The SEC rejected seven other derivative-backed ETFs proposed by GraniteShares & Direxion. Those ETFs weren't due for final decisions until September 15 and 21 respectively. The decision came down to the risk of market manipulation & fraud. The SEC can only approve an ETF that is "designed to prevent fraudulent and manipulative acts and practices." These ETFs were not so, as according to last month's Winklevoss ETF rejection, the SEC found that:
- Bitcoin ($BTC) markets are not inherently resistant to manipulation
- To deter manipulation, exchanges need a surveillance-sharing agreement with a regulated market of significant size
The ETFs tried to get around this problem by pricing BTC via the CBOE and CME futures markets, however, the SEC found that the bitcoin futures markets aren't "of significant size" as required by the Winklevoss denial. They also repeated the concern that most trading "occurs on unregulated venues overseas that are relatively new and that generally appear to trade only digital assets."   The SEC's demand is clear. They want to see:
- A surveillance-sharing agreement . . .
- With a regulated market . . .
- Of significant size.