Over the weekend, we reported  that in a move that will certainly not end well for investors, the New York Stock Exchange asked the SEC to approve five ETFs including 2x leveraged and inverse flavors, linked to Bitcoin futures - which launched in December on the CME amd Cboe, in line with what we speculated last August, that "we suspect a Bitcoin Futures ETF may actually occur before a Bitcoin ETF."

These latest ETFs submissions took the number of bitcoin ETFs pending approval to well over 10 as some of the most prominent asset managers are eager to jump on board the blockchain mania.

However, while the rush into the space is hardly surprising in light of the blistering surge in cryptocurrencies, what was unexpected is that overnight, two U.S. companies shelved proposals to launch bitcoin exchange-traded funds, citing ongoing concerns by the Securities and Exchange Commission, filings showed on Monday.

Following a phone "call with the SEC", the filings note that staff at the regulatory agency “expressed concerns regarding the liquidity and valuation” of futures contracts based on the digital asset, according to one of the filings.

Here's filing showing Direxion withdrawal of Bitcoin ETF after "call w SEC" but unclear if includes 2x ETFs.. pic.twitter.com/RqO4H0ujyg

— Eric Balchunas (@EricBalchunas) January 9, 2018

Trusts controlled by Rafferty Asset Management LLC and Exchange Traded Concepts LLC each canceled plans to launch three bitcoin funds that could be traded by retail investors as easily as stocks, Reuters reported.

While it is unclear what "concerns" the SEC expressed as it snuffed the ETF submissions, and why it proactively discussed these issues with the funds, the move adds a new hurdle to the bid by Wall Street firms to capitalize on investor interest in cryptocurrencies, and it opens a rare public divergence between two financial regulatory agencies over how to regulate them.

Making matters worse, regulators have been scrambling to figure out how to deal with this relatively new asset, and no single one has control. The SEC has dominion over funds, while the Commodity Futures Trading Commission (CFTC) governs futures contracts. The CFTC has been under pressure to address concerns it did not fully assess the potential risks that bitcoin poses to the financial system.

To be sure, the SEC’s decisions also face close scrutiny given its power to clear the way for products that could be among the more volatile traded in U.S. equity markets.  And adding to the complexity is the fact that as we reported over the weekend, not only are fund managers hoping to get bitcoin ETFs approved, but also 2x  leveraged and inverse ETFs too, which assure even greater volatility and chaos in the space.

Putting the potential levered moves in context, over the last two years alone, bitcoin has gained or lost more than 10 percent on a single day 26 different times, according to data from the Bitstamp exchange.

Perhaps the best solution to the problem is to simply approve all the ETF requests, and throw in a few 3x and 4x ETFs for good measure, at which point let Darwinism handle the rest...