Bitcoin Price Drops Under $8,000 as SEC Again Rejects Winklevoss Brothers Bitcoin ETF

News and Analysis
27.07.2018

The U.S. Securities and Exchange Commission for the second time disapproved a Bats BZX Exchange application to list the Winklevoss Bitcoin ETF, causing the bitcoin price to drop by more than 3.5% to below $8,000.

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.

Shortly after, Bats submitted a petition to review that decision, triggering another wave of comments – and expectation – about the agency’s willingness to approve a cryptocurrency exchange-traded product.

Yet the concerns highlighted in the March 2017 decision don’t seem to have abated, according to the decision published Thursday, July 26, by the SEC.

As CoinDesk reports, the agency notably highlighted that its decision doesn’t constitute a judgment against cryptocurrencies and blockchain in general, but rather the structure of the proposal that was pitched.

The SEC wrote:

“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 in detail below, BZX 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 its rules be designed to prevent fraudulent and manipulative acts and practices.”

However, the Commission left the door open to potentially approving such products in the future, noting that “over time, regulated bitcoin-related markets may continue to grow and develop.”

“For example, existing or newly created bitcoin futures markets may achieve significant size, and an ETP listing exchange may be able to demonstrate in a proposed rule change that it will be able to address the risk of fraud and manipulation by sharing surveillance information with a regulated market of significant size related to bitcoin, as well as, where appropriate, with the spot markets underlying relevant bitcoin derivatives,” the agency continued.

Should that happen, “the Commission would then have the opportunity to consider whether a bitcoin ETP would be consistent with the requirements of the Exchange Act.”

Earlier this week, investment management firm VanEck has lobbied the US Securities and Exchange Commission (SEC) in a fresh attempt to interest the regulator in authorizing a Bitcoin exchange-traded fund. In a letter dated July 20, VanEck, which earlier this month announced it planned to collaborate with fellow operator SolidX to launch a fund, reiterated its belief that the industry was both ready and able to support it.

In a separate development of events, Bitwise Asset Management, creator of the world’s first privately-offered cryptocurrency index fund, the Bitwise HOLD 10 Private Index Fund, announced the filing of the registration statement for a new fund, the first publicly-offered cryptocurrency index exchange-traded fund (ETF).

The new ETF will be called the Bitwise HOLD 10 Cryptocurrency Index Fund. It aims to track the returns of Bitwise’s HOLD 10 Index, a market-cap-weighted index of the 10 largest cryptocurrencies, rebalanced monthly.

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