A day after the US Securities and Exchange Commission (SEC) executives dismissed a total of nine applications, which sought approval for the establishment of Bitcoin ETFs, Hester Peirce, SEC Commissioner has divulged that the SEC’s order has been put on stay and a review of the dismissal orders will be done soon.
The applications for nine Bitcoin ETFs had been submitted by ProShares, Direxion and GraniteShares.
The tweet below includes link to a letter forwarded by Brent Fields, SEC’s Secretary, to Eugene Schlanger, Counsel for NYSE Group.
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 letter, which refers to the outright dismissal of the five Bitcoin ETFs from Direxion, includes the important statement:
“This letter is to notify you that, pursuant to Rule 43 1 of the Commission’s Rules of Practice, 17 CFR 201.431 , the Commission will review the delegated action. In accordance with Rule 43 1 (e), the August 22 order is stayed until the Commission orders otherwise.”
Notably, two more letters, referring to the Bitcoin ETF applictions from Proshares and Graniteshares, have been also issued. Similar to the case of Direxion, the Proshares letter was also forwarded to NYSE Group, but addressed to David De Gregorio, Senior Counsel. Likewise, a letter referring to the dismissal of Bitcoin ETF application from GraniteShares was sent to Kyle Murray Assisant General Counsel for Cbloe Global Markets.
The first two letters, related to Direxion and ProShares, were forwarded to the NYSE Group because the proposed rule change was suggested by NYSE Arca (“the top U.S. exchange for the listing and trading of exchange-traded funds”), which intended to list the ETFs of Direxion and ProShares for trading. CBOE Global Markets was chosen for sending the letter related to GraniteShares because its subsidiary CBOE BZX had suggested the rule change and intended to list the ETFs issued by GraniteShares.
An hour later, Commissioner Peirce followed up with the tweet provided below:
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
There is no information regarding when the review of the dismissed applications will take place.
“The Office of the Secretaty will notify you of any pertinent action taken by the Commission.”
The former SEC Commissioner Michael Piwowar (resigned last month) issued an interesting reply:
It only takes one Commissioner to ask for a review of a staff decision and stay the ruling. After their review is complete, it would take a majority of the Commission to overturn the staff decision.
— Michael Piwowar (@MichaelPiwowar) August 23, 2018
American lawyer Jake Chervinsky (who is known for his exceptional commentary on SEC’s decisions regarding Bitcoin ETFs) acknowledged the opinion of Michael Piwowar, and tweeted the following message:
“Don’t get too excited, folks. Under Rule 431 of the SEC’s Rules of Practice, it only takes a single Commissioner to order a review like this. @HesterPeirce deserves credit & respect for putting up a fight, but there’s no reason to think yesterday’s rejections will be reversed.”
Chervinsky, in his message, refers to Rule 431 (“Commission consideration of actions made pursuant to delegated authority”), which you can be studied in detail in the SEC’s “Rules of Practice” document.
The news has given another hope to Bitcoin bulls. At the time of writing this article, Bitcoin hovers around $6,500 levels.
