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After initially rejecting nine total ETF proposals from ProShares, Direxion, and GraniteShares on Wednesday, the Securities and Exchange Commission (SEC) commissioner announced that it would go back and review the applications that were rejected on Wednesday.

The news comes as part of a broader effort by several groups to receive approval from the SEC to list a Bitcoin Exchange-Traded Fund (ETF). While the SEC has already rejected numerous proposals — including the Winklevoss twins’ proposal back in July — there remains a substantial amount of confusion regarding what a Bitcoin ETF is, what it means, and how the latest news of the review process affects proposals moving forward.

What is a Bitcoin ETF?

An Exchange-Traded Fund (ETF) is an investment vehicle for tracking asset performance. While an ETF tracks the performance of a specific asset, it allows investors to invest in the ETF that correlates with the underlying asset without having to own the asset itself. In the case of Bitcoin, this would enable investors to invest in Bitcoin without actually having to hold it; rather their focus would purely be on price speculation and gains and losses of Bitcoin in the markets.

The point of ETFs is to allow for diversity, notably allowing investors to invest in groups of assets as well, such as a group of stocks representing pharmaceuticals. A Bitcoin ETF is seen as a significant step towards more widespread adoption and familiarity of the legacy cryptocurrency as it would mean institutional investors and other traditional financial investors would have access to its price speculation.

Notably, these investors do not need to own the Bitcoin itself to invest in it. The ETF is tied to the Bitcoin price. A Bitcoin ETF bypasses cryptocurrency exchanges and complicated storage procedures that many people are not comfortable with, thus granting the asset a much wider audience of speculation.

The Current Situation

The SEC has already rejected numerous Bitcoin ETF proposals, commonly citing that in the latest rejections:

“..has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices,

The recent nine proposals for Bitcoin ETFs were tied to the futures market and varied slightly from the Winklevoss proposal denied last month, and were not expected to go through anyways. Outside of the postponed and upcoming VanEck Associates Corp. and SolidX Partners, Inc Bitcoin ETF proposal in September, the community expectation is that definitive action for a Bitcoin ETF won’t occur until early 2019.

However, the SEC followed up their initial rejections of the nine latest proposals from ProShares, Direxion, and GraniteShares with letters confirming that they are going back and reviewing the rejected proposals. This comes as SEC Commissioner Hester Pierce — who recently cast a dissenting opinion on the Winklevoss proposal rejection — tweeted that the SEC staff processes proposals under the general guidelines, which is subject to review by the commission.

The SEC is concerned about the potential for market manipulation of Bitcoin ETFs since the current Bitcoin futures markets are relatively small and susceptible to influence. Depending on the weighted legitimacy of these concerns are moving forward, a Bitcoin ETF seems unlikely to be accepted this early.

Regardless of how the next few months play out, Bitcoin ETFs are seen as a major step for the cryptocurrency’s mainstream acceptance and could open the door for some more definitive regulations in the broader cryptocurrency sphere.

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