After weeks of anticipation, the U.S. Securities and Exchange Commission (SEC) has issued decisions on three companies that sought to list bitcoin exchange-traded funds (ETFs) with varying structures. The rulings were published the morning of August 22. The Commission rejected applications from ProShares, BZX Exchange, and Direxion.
The Securities and Exchange Commission continues to deny ETF proposals
None of the firms met the minimum standards the SEC requires to approve a bitcoin ETF. This round of rulings rejects nine proposals across three companies.
- ProShares: The deadline for the SEC to respond to ProShares’ filing fell today. The company sought approval for two bitcoin ETFs—one designed for long exposure and another that would allow short positions. The Commission rejected ProShares’ proposal, stating the exchange did not meet the Exchange Act standards. Specifically, the SEC determined the exchange had not shown it could prevent fraudulent or manipulative acts.
- BZX Exchange: The proposed GraniteShares bitcoin funds, both bullish and bearish versions, were also rejected by the SEC. The rationale cited for denying these filings was the same as for ProShares: inadequate measures to prevent market manipulation.
- Direxion: This proposal attracted attention because it would have offered leveraged bitcoin ETFs. The SEC rejected five Direxion funds that would have provided leveraged access to bitcoin (up to 2:1 leverage). The Commission reiterated the same concerns about market surveillance and manipulation in these rulings.
The decision is not a judgment on bitcoin technology itself
Although multiple ETF applications were denied, the SEC’s decisions do not reflect an assessment of bitcoin’s underlying technology. Rather, the rulings focus on whether the proposed listings satisfy trading and market surveillance requirements for securities on an exchange. The Commission concluded these applicants did not demonstrate that trading volume and market safeguards would be sufficient to deter manipulation. The SEC emphasized that its disapproval is not an evaluation of bitcoin’s utility or of blockchain technology more broadly:
“While the Commission disapproves the proposed rule changes, it emphasizes that this disapproval is not based on an assessment of whether bitcoin or blockchain technology more generally has utility or value as an investment or innovation.”
From the review schedule for August and September, only two SEC rulings remain pending. The most notable upcoming decision is whether to allow a bitcoin ETF to trade on the Chicago Board Options Exchange (CBOE). Traders are watching closely, and heightened volatility is expected around those outcomes. Markets were not severely shaken by today’s rejections: bitcoin remained supported near $6,400 several hours after the SEC announcements.