An SEC decision to disapprove the listing of several Bitcoin exchange-traded funds (ETFs) on the New York Stock Exchange(NYSE) has been stayed pending review.
Commissioner Hester Pierce announced the stay yesterday on Twitter.
Yesterday's staff orders disapproving SRO rules related to a number of bitcoin ETFs are stayed pending Commission review. See, for example: https://t.co/Ky9Z8t1E4q
— Hester Peirce (@HesterPeirce) August 23, 2018
The SEC had ruled the day before to deny a rule change to permit the NYSE to list multiple Direxion BTC ETFs on the exchange. The proposed Direxion Bitcoin ETFs included “Bull,” “Bear” and “2X” versions.
In the Wednesday ruling against the NYSE, the SEC found that the exchange had failed to show the Commission that the requested rule change was consistent with Exchange Act requirements to, “prevent fraudulent and manipulative acts and practices,” and, “protect investors and the public interest.”
The SEC gave similar reasons to the NYSE as they did when they rejected the Cboe’s Bitcoin ETF proposal on the same day, namely: Bitcoin and Bitcoin futures markets that would underly the proposed ETFs still lack sufficient size, maturity and oversight to resist fraud.
Commissioner Peirce, however, has now made it clear on Twitter that SEC higher ups will be reviewing the NYSE/Direxion orders made by “staff…on behalf of the Commission.”
In English: 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.
— Hester Peirce (@HesterPeirce) August 23, 2018
Commissioner Peirce also attached a letter from the Securities and Exchange Commission to the NYSE in the Tweet.
In the letter, Commission Secretary Brent J Fields tells NYSE counsel Eugene Shlanger that the August 22, “delegated order…is stayed until the Commission orders otherwise.”
Reactions to the stay on Twitter were mixed. Twitter user “Jimbo” responded to Commissioner Peirce’s tweet:
“You’re the best! thanks for being a great voice to all of us in the CryptoCurrency space! Cheers!”
Others questioned the “market health” of derivatives generally. “Blockchain-NetSEC” responded to Commissioner Peirce:
“I personally would prefer they stay denied and only approve the Vaneck ETF on September . The best scenario for investors and market health is real physical delivery ETF and not “paper” long/ short ETF.”
A total of 9 requests for rule changes to permit Bitcoin ETFs were reportedly denied by the SEC on Wednesday.
An SEC decision on a proposed VanEck Bitcoin ETF is due September 21st, and there is no word yet on when the SEC will complete its promised review of the Direxion ETF rejections.