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Self Regulation Rule Change Request to SEC

On January 4, 2018, NYSE Arca, Inc. filed with the Securities and Exchange Commission pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder a proposed rule change to list and trade shares of the following exchange-traded products under NYSE Arca Rule 8.200-E, Commentary .02:

  • Direxion Daily Bitcoin Bear 1X Shares (“1X Bear Fund”)
  • Direxion Daily Bitcoin 1.25X Bull Shares (“1.25X Bull Fund”)
  • Direxion Daily Bitcoin 1.5X Bull Shares (“1.5X Bull Fund”)
  • Direxion Daily Bitcoin 2X Bull Shares (“2X Bull Fund”)
  • Direxion Daily Bitcoin 2X Bear Shares (“2X Bear Fund”)

The proposed rule change was published for comment in the Federal Register on January 24, 2018. The Commission received no comment letters on the proposed rule change.

On March 1, 2018, pursuant to Section 19(b)(2) of the Act, the Commission 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.

This order institutes proceedings under Section 19(b)(2)(B) of the Act to determine whether to approve or disapprove the proposed rule change.

One can find a complete copy of the proposed rule changes at Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change Relating to Listing and Trading.

Most people involved with cryptocurrency seem to think the entire concept of futures trading of bitcoin is laughable at best, because futures trading markets has no influence over the value of bitcoin in any way.

However this proposition over a change in the Securities Exchange Act of 1934 brings up some very interesting questions.

Is it possible that the blockchain industry could come together and form its own self-regulating body within the Initial Coin Offerings space and within the cryptocurrency industry and submit to the SEC their own proposition allowing t hem to self regulate the industry?

It seems unlikely they could ever expect to be completely self-regulated, however it could introduce changes to existing laws in how cryptocurrency, blockchains, and ICO’s are treated in the future as well as regularly make suggestions that could help aid the SEC in determining what types of ICO’s to consider securities and what types to leave alone.

One of the largest fears of the blockchain community is the SEC overstepping its role and preventing projects from moving forward, as well as preventing US citizens from investing in specific projects on the grounds that they are unregistered securities.

The SEC stayed out of the industry for over 7 years, and the ICO space was flooded with scams and ponzi schemes when they truly began to get involved in 2017. It could very easily be argued that the SEC never wanted to take on this task in the first place, but no one else was doing it.

Despite constant claims that blockchain, cryptocurrency, and ICO’s needs to be self-regulated no one seems to be stepping up to the challenge. It appears that instead the community at large is more interested in having an entirely unregulated industry instead of a self-regulated one.

Until some body steps up and begins to create some sort of guidelines and regulations, and attempts to have the SEC agree to let them govern it, what else can the SEC do except stop the scams and attempt to do their best at regulating an otherwise unregulated industry.

It is possible that this move by Arca is showing others that self-regulating is in fact possible, someone just has to care enough to create a governing body to so, and be willing to work with the SEC to report scams, make clear guidelines, and propose a form of self-regulation to begin with.

If no one steps up to the plate to even try, it is clear that someone needs to do something to stop the scams, the question is who? If no one else is willing, doesn’t the obligation fall on the SEC to protect investors?

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