collected by :Donald Luther
“Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated,” the SEC said in a statement posted online.
“The Commission notes that bitcoin is still in the relatively early stages of its development and that, over time, regulated bitcoin-related markets of significant size may develop.”
Bitcoin had scaled to a record of nearly $1,300 this month, higher than the price of an ounce of gold, as investors speculated that an ETF holding the digital currency could woo more people into buying the asset.
Yet bitcoin presents a new set of risks to investors given its limited adoption, a number of massive cybersecurity breaches affecting bitcoin owners and the lack of consistent treatment of the assets by governments.
Bitcoin is a virtual currency that can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government.
One is Grayscale Investment’s Bitcoin Investment Trust, filed with the SEC at the beginning of the year, and the other is the SolidX Bitcoin Trust, filed in the middle of last year.
Is a bitcoin ETF DOA?
Some observers have noted that these proposed ETFs have pegged their own pricing mechanism to indexes different from the one the Winklevoss ETF would have used.
To recap, the New York Stock Exchange (NYSE) back in the beginning of 2017 filed a proposal for a rule change that would have paved the way for the Winklevoss twins’ Bitcoin Trust to trade on the NYSE ETF exchange, known as Arca.
The ETF might have been an investment vehicle with some liquidity and attractiveness to investors, who would have not needed to register personal digital wallets to hold bitcoin.
Bitcoin Plummets 18% as SEC Rejects Winklevoss ETF Proposal
“We remain optimistic and committed to bringing COIN to market, and look forward to continuing to work with the SEC staff,” Tyler Winklevoss said in a statement.
The Securities and Exchange Commission refused to grant an exemption that would have let the Winklevoss Bitcoin Trust trade on the Bats BZX Exchange, according to a filing posted Friday on the regulator’s website.
Bitcoin fell as much as 18 percent against the dollar to $978.76 after the decision, the lowest intraday price in a month.
“The reasons for disapproval appear unrelated to specifics of the Winklevoss filing and therefore this announcement is a negative indicator for the prospects of the other bitcoin ETFs,” he said.
The decision by the SEC was made by the Trading and Markets Division staff, according to the filing.