The U.S. Securities and Exchange Commission (SEC) rejected the proposed rule change to list and trade a Bitcoin ETF on Bats BZX Exchange on March 10. The exchange then filed a petition for a review of the Commission’s decision, which was granted on Monday.
Also read: SEC Rejects Rule Change for Bitcoin ETF
SEC Grants Petition for Review
Following the SEC’s decision to disapprove its proposed rule change for the listing and trading of Coin ETF, Bats BZX Exchange quickly filed a “Notice of Intention to Petition for Review” of the Commission’s decision on March 17. It then followed up with the actual “Petition for Review” on March 24. The order to reject Coin ETF was made by the SEC’s “Division of Trading and Markets pursuant to delegated authority”. The exchange followed procedures outlined in Rule 430(b)(1) and 430(b)(2) of the SEC’s Rules of Practice which allow for an “appeal of actions made pursuant to delegated authority”.
After one month, the SEC finally approved Bats BZX Exchange’s petition. The “Order Granting Petition for Review” was published on Monday. The Commission wrote:
[The SEC] ordered that the petition of BZX for review of the Division’s action to disapprove the proposed rule change by delegated authority be granted.
In addition, the SEC is allowing anyone to file a statement to support or oppose the decision made by delegated authority on or before May 15. Meanwhile, the “order disapproving such proposed rule change shall remain in effect,” the Commission wrote.
Bats BZX Exchange’s Petition
In its 25-page petition for a review, Bats Exchange states that the decision by the delegated authority “is clearly erroneous”.
The exchange claims that the standard applied in their disapproval decision “is inconsistent with prior approval orders” and is not even required by the Securities Exchange Act. The delegated authority has also overstated manipulation concerns which are largely theoretical, Bats Exchange believes.
It then urges the Commission to review their decision, citing its proposed rule change and that the listing of a Bitcoin ETF “constitute an exercise of discretion or decision of law or policy that is important and that the Commission should review.” In addition, the exchange maintains that its proposed rule change is “consistent with the Exchange Act under a standard applied to other approved commodity-trust ETPs [Exchange Traded Products].” Bats Exchange then concluded that:
The exchange believes that the Commission should set aside the Staff’s Order and approve the Proposal in order to ensure consistency with the Exchange Act and with prior ETP approvals as well as to provide investors access to bitcoin through a regulated and transparent investment vehicle.
Meanwhile, the SEC has also rejected the proposed rule change by NYSE Arca to list and trade shares of Solidx Bitcoin Trust. However, unlike Bats BZX Exchange, NYSE Arca did not petition for a review.
The SEC still has one more proposed rule change for a bitcoin ETF in the pipeline, Barry Silbert’s Bitcoin Investment Trust. On March 25, the Commission designated May 10 as the date it would make a decision on this proposed rule change; a deadline that could be extended further.
Do you think the SEC will change its mind about disapproving Coin ETF? Let us know in the comments section below.
Images courtesy of Shutterstock and Bats Exchange
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