This post has been updated.
On August 22, 2018, following its recent decision denying the application of the Winklevoss Bitcoin Trust, the SEC denied applications for nine more Bitcoin ETFs. The orders involving applications by Cboe BZX and NYSE Arca (here and here) are similar to each other and cite many of the same reasons for denial. As with the Winklevoss application, the SEC went out of its way to emphasize 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." Instead, the SEC reasoned that the exchanges failed to meet their burdens under SEC regulations to demonstrate their ability to prevent fraudulent and manipulative acts and practices in respect of the planned ETFs. Notably, the exchanges did not demonstrate that bitcoin futures markets are "markets of significant size." These orders are not surprising in light of the recent position the SEC took with the Winklevoss application, and they continue to show that the SEC remains skeptical of the burgeoning digital asset economy.
Update: Since this blog post went to press, the SEC announced that the commissioners would review the earlier orders, and the denial of the nine ETFs has, as of August 24, been stayed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
