In a surprise move, America’s Securities and Exchange Commission (SEC), will review its decision to reject the bitcoin ETF proposed by the Winklevoss twins.
Eduardo A. Aleman, an Assistant Secretary at the SEC and the person who made the decision to reject the ETF, has granted a request to review his ruling. The request was made by the Bats Exchange, which made the application for a rule change allowing the ETF to be listed. The SEC says:
“The petition of [the Bats Exchange] for review of the Division’s action to disapprove the proposed rule change by delegated authority be GRANTED; and It is further ORDERED that any party or other person may file a statement in support of or in opposition to the action made pursuant to delegated authority on or before May 15, 2017.”
The way SEC rejected bitcoin’s ETF is fairly peculiar. Usually, the commission offers the proposer an opportunity to withdraw their application to allow them the option of re-applying at a later date after making necessary amendments.
It is not clear whether such offer was made in this case. The decision was surprisingly announced at the very last minute, just before a deadline was reached.
There are indications, however, the SEC, through delegated authority, had made a decision around the 28th of February, some two weeks before making its announcement.
Questions, therefore, have been raised regarding the way this decision has been made. Some have wondered why it was left to the very last minute, whether the decision was released to anyone else before it was made public, whether any market manipulation took place.
Moreover, the justification for bitcoin ETF’s rejection contained factually incorrect and outdated information. The Assistant Secretary, for example, stated most of bitcoin’s trading took part in unregulated Chinese exchanges.
That’s no longer true. PBoC, China’s central bank, has laid out a number of requirements for Chinese bitcoin exchanges. Further ordering them to suspend bitcoin and deposit withdrawals, sending their trading volumes down crashing as well as bitcoin’s price which trades at a $200 discount in Chinese exchanges.
Such information was publicly available about two months before the ETF’s rejection, raising questions regarding SEC’s information and, perhaps, competence. It may be due to these and other reasons that the SEC has now decided to re-open the matter.
It is not currently very clear how this review will be undertaken, but the document invites public commentary in support or against the decision by the 15th of May, just around two weeks away.
We’ll certainly learn much more, in the coming days and weeks, as a surprising twist in bitcoin’s story presents itself. For now, all that’s left to say is that an approval would be historic. A second rejection, too.