SEC takes another look at Bitcoin ETF

The American stock market watchdog, The Securities and Exchange Commission ?? (SEC), is going to review whether a Bitcoin ETF should be possible. After a lengthy multi-year process, the SEC rejected the application of the COIN ETF and the SolidX ETF last month. The exchange on which the COIN ETF should have been traded, Bats, has applied to have the decision reviewed.

The SEC has announced that the application to review the decision has been approved:

Pursuant to Rule 431 of the Rules of Practice,11 BZX’s petition for review of the Disapproval Order is granted . Further, the Commission hereby establishes that any party to the action or other person may file a written statement in support of or in opposition to the Disapproval Order on or before May 15, 2017.

It seems unlikely that the SEC will change its mind, as the reason given for the rejection was not unfounded. Many bitcoin markets are simply not under strict supervision and often do not fall under existing regulation. The hope is that new regulations will be created in due course so that bitcoin exchanges can be regulated.

The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (ETPs) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.

In addition to reviewing the application for a bitcoin fund, the SEC is now also reviewing an application for an Ethereum ETF. The EtherIndex Ether Trust applied last year to enable an investment fund for Ether (the digital currency that Ethereum uses). The SEC will now form an opinion on this and is open to input from interested parties on the proposal.

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