SEC Rule On Direxion Bitcoin ETFs Expected This Fall

Do you remember the 21st night of September?

Cryptocurrency traders will, as it could be the date when the Securities and Exchange Commission renders a decision on the fate of several bitcoin-related exchange traded funds proposed by Direxion, one of the largest issuers of inverse and leveraged ETFs.

What Happened

The issuer is seeking approval for the the Direxion Daily Bitcoin Bear 1X Shares, Direxion Daily Bitcoin 1.25X Bull Shares, Direxion Daily Bitcoin 1.5X Bull Shares, Direxion Daily Bitcoin 2X Bull Shares and Direxion Daily Bitcoin 2X Bear Shares under NYSE Arca rule 8.200-E.

The SEC extended the review period to Sept. 21 for its up or down decision on the ETFs. 

Why It's Important

To this point, the SEC has not approved any issuers' plans for bitcoin or cryptocurrency ETFs. Earlier this year, the commission asked Direxion and several other issuers to withdraw plans for bitcoin ETFs.

In January, the New York Stock Exchange Arca sought a “a proposed rule change to list and trade shares of the following exchange-traded products under NYSE Arca Rule 8.200-E,” according to the SEC.

At the end of the first quarter, the SEC “designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change,” according to the commission.

In April, the SEC commenced proceedings to determine the fate of the proposed rule change and said it has received just two comments on the proposal.

What's Next

The fate of all bitcoin ETF efforts in the U.S. lies in the hands of the SEC, but the approval of more plain vanilla bullish products could pave the way for leveraged funds down the road.

It is possible the SEC could opt to approve some but not all of Direxion's bitcoin funds, perhaps giving the nod to the inverse and lightly leveraged products before moving up to the double-leveraged funds.

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