In a considerable setback, the US Securities and Exchange Commission has denied a request to list the country’s first Bitcoin ETF
The price of bitcoin plummeted on Friday, after news that US regulators would not allow a new exchange traded fund designed to track & trade bitcoin. The Bitcoin ETF was proposed by Tyler and Cameron Winklevoss of Facebook notoriety.
According to a publicly distributed notice detailing the decision, the SEC stated,
“As discussed further below, the Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”
The SEC continued saying,“The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.”
SEC approval of the Bitcoin ETF would have delivered an unprecedented level of interest and credibility to bitcoin and provided the currency with yet another boost in value. Last week the currency briefly hit a new record price of $1325 and surpassed the price of gold in part due to a surge in optimism surrounding the pending SEC approval of the Bitcoin ETF. After the SEC decision had gone public, bitcoin dropped below $1000, however, has since stabilized.
The Bitcoin ETF was set to trade on the Bats exchange and would have given average investors the opportunity to invest in bitcoin without actually holding the currency, thereby making it much more accessible to the wider public. While the rejection is a considerable setback for bitcoin, there are still two other ETF proposals pending before the SEC, which have the chance of approval in the coming months.