SEC Rejects Winklevoss Bitcoin ETF

27 July, 2018, 21:38 | Author: Natasha Holloway
  • SEC rejects Bitcoin ETF proposal BTC goes below $8,000 19454

The move comes more than a year after the SEC turned down a rule change request from the Bats BZX Exchange that would have paved the way for the bitcoin-tied investment vehicle.

That news sent the markets into a tailspin, as many analysts took it as an omen that the SEC is unlikely to approve any of the manifold cryptocurrency ETF applications now pending at the agency.

The decline halted Bitcoin's July rally, which had seen the cryptocurrency gain more than 30 per cent after its plunge earlier this year.

"Investors are better served by products traded on a regulated securities market and protected by robust securities laws and we will continue to work with the SEC and ETF issuers to construct a fully regulated product", said Chris Concannon, chief operating officer of CBOE Global Markets.

"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".

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"More institutional participation would ameliorate numerous Commission's concerns with the bitcoin market that underlie its disapproval order", she wrote, adding that the decision "sends a strong signal that innovation is unwelcome in our markets, a signal that may have effects far beyond the fate of bitcoin ETPs".

The SEC said there was not enough evidence that efforts to thwart manipulation of the ETF's price or that of the underlying bitcoin market would be successful. The proposal was rejected because it is not "designed to prevent fraudulent and manipulative acts and practices [and] to protect investors and the public interest".

In her official post, she calls out SEC on dampening the innovation, engaging in merit regulation and inhibiting institutionalization that could mitigate the risks present in bitcoin and crypto market. The SEC reportedly followed Exchange Act Section 6 (b)(5) when they were taking the decision of whether to accept it or not.

In order to alleviate these concerns, BZX would need to "enter into surveillance-sharing agreements with, or hold Intermarket Surveillance Group membership in common with, at least one significant, regulated market relating to bitcoin" as " s$3 uch agreements provide a necessary deterrent to manipulation because they facilitate the availability of information needed to fully investigate a manipulation if it were to occur".

There are now no bitcoin ETFs on the market in the USA, although the Bitcoin Investment Trust (GBTC) is somewhat similar to an ETF and trades over the counter. Regulators even launched an investigation in May to check whether bitcoin price movement was manipulated or not.

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