The primary reason given for denying the changes is simply that no means are provided to ensure fraudulent or manipulative practices are prevented in these markets.
From the rejection:
"This order disapproves the proposed rule change. Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because, as discussed below, the Exchange 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 a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices. Among other things, the Exchange has offered no record evidence to demonstrate that bitcoin futures markets are “markets of significant size.” That failure is critical because, as explained below, the Exchange has failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to bitcoin is necessary to satisfy the statutory requirement that the Exchange’s rules be designed to prevent fraudulent and manipulative acts and practices."
Both rejections use the same basic wording to make their point.
The rejection is not a huge surprise to the crypto community, and many were expecting it. Upon the news breaking, the price of bitcoin has not immediately plummeted as some may have expected. In fact it seems to have gone up slightly, and is now at $6392.60. Will it hold? Stay tuned to Chepicap to find out.