SEC Wants Second Look at Nine Bitcoin ETFs

One day after the U.S. Securities and Exchange Commission (SEC) rejected proposed rule changes for nine bitcoin ETFs, the Commission initiated a review of all related decisions. Three rejection orders made on August 22 are now stayed pending the review by the SEC Chairman and the Commissioners.

SEC Initiates Review of Nine Bitcoin ETFs

After rejecting the proposed rule changes for nine bitcoin ETFs, the SEC sent out notices stating that it will review the delegated actions on all of them. All August 22 rejection orders are now stayed.

This is the first time the SEC initiated a review of its staff decisions on bitcoin ETFs. In contrast, when the proposed rule change for the Winklevoss bitcoin ETF was rejected in March, it took Bats BZX exchange to file a petition for the Commission to review the decision.

News.Bitcoin.com reached out to the SEC for comments. According to Rule 431(c) of the SEC’s Rules of Practice:

The Commission may, on its own initiative, order review of any action made pursuant to delegated authority at any time, provided, however, that where there are one or more parties to the matter, such review shall not be ordered more than ten days after the action. The vote of one member of the Commission, conveyed to the Secretary, shall be sufficient to bring a matter before the Commission for review.

Commissioner Peirce’s Comments

While the Commission did not confirm which Commissioner(s) called for the review, Commissioner Hester Peirce has been vocal on social media about the review taking place.

She has since tweeted, “Yesterday’s staff orders disapproving SRO rules related to a number of bitcoin ETFs are stayed pending Commission review,” elaborating:

The Commission (Chairman and Commissioners) delegates some tasks to its staff. When the staff acts in such cases, it acts on behalf of the Commission. The Commission may review the staff’s action, as will now happen here.

In March last year, when the SEC rejected the proposed rule change by Bats BZX exchange, Peirce was not yet at the Commission. In a recent interview with CNBC, she said that she had been at the Commission for only six months and was not part of the original decision made on said bitcoin ETF.

Following the March rejection, Bats BZX exchange filed a petition for a review with the SEC; the final decision was made over a year later. Peirce was part of the final review and she voted for the approval of the bitcoin ETF while three of her colleagues voted against.

Furthermore, she said during the interview that the Commission overstepped its bounds by rejecting bitcoin ETFs based on the underlying market.

Three Review Orders

On August 23, the SEC sent out three letters. One was sent to Cboe Global Markets regarding two Graniteshares bitcoin ETFs. Two were sent to NYSE Group regarding five Direxion bitcoin ETFs and two Proshares bitcoin ETFs. All nine were rejected on August 22, as news.Bitcoin.com reported.

The three letters similarly read:

This letter is to notify you that, pursuant to Rule 431 of the Commission’s Rules of Practice, 17 CFR 201.431, the Commission will review the delegated action. In accordance with Rule 431(e), the August 22 order is stayed until the Commission orders otherwise.

Images via Shutterstock and Hester Peirce.

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