Winklevoss Bitcoin ETF Proposal Gets Another SEC Refusal, Crypto Market is in Red
The US Securities and Exchange Commission (SEC) has once again rejected to give the green light to the listing of a Bitcoin-related exchange-traded fund (ETF) proposed by the Winklevoss brothers. The regulator, which initially disapproved the Winklevoss Bitcoin Trust in March 2017, now confirmed its decision in a 92-page filing, citing manipulation concerns.
The news, which came out just before midnight UTC had an instant impact on the cryptocurrency market, with the Bitcoin (BTC) price losing more than $400 in about two-and-a-half hours. As at 6:44 UTC BTC is trading at 7,917, down 3.7% for the past 24 hours.
The famous billionaire twins Cameron and Tyler Winklevoss, who stand behind the Gemini crypto exchange, were the first to propose a Bitcoin ETF in June 2016. The fund, aiming at attracting institutional investors, was supposed to be traded on Bats BZX Exchange, part of the largest US options exchange CBOE Global Markets.
After SEC’s first rejection in March 2017, Bats, which submitted the listing application, appealed the regulator’s decision, asking for it to be reviewed. Now, the watchdog said it was not convinced that the ETF product would be protected against manipulation.
The SEC also expressed concerns about the reliability of Bitcoin-related trading and volume data provided by the Gemini crypto exchange. It noted that CBOE couldn’t demonstrate that it had the ability to get satisfactory data on Bitcoin trading that would back the proposed fund.
“BZX asserts that intrinsic properties of bitcoin and bitcoin markets, including the Gemini Exchange, provide resistance to manipulation. But BZX has failed to carry its burden to demonstrate that its assertion is correct,” the SEC noted in its filing.
The proposal from BATS to list and trade the Winklevoss ETF was rejected with three votes against one, that of Commissioner Hester Peirce. The regulator’s decision can be appealed in federal court.
Notably, the SEC stressed that rejecting this particular Bitcoin-related ETF doesn’t mean the agency was denying the value of Bitcoin and the blockchain technology, which leaves some hope for other Bitcoin ETF applications that are currently pending.
“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,” the regulator said.
There are at least five other Bitcoin ETF proposals that the SEC has to review. A key ETF decision is expected by mid-August, when the regulator has to pronounce its highly-anticipated verdict on the Bitcoin ETF proposal by VanEck and SolidX, submitted by CBOE last month.
Earlier this week, the SEC rescheduled till September its decision on whether to approve five Bitcoin ETFs proposed by investment firm Direxion Asset Management to trade on the New York Stock Exchange (NYSE).
Also earlier this week, Bitwise Asset Management, said it has applied with the SEC to list a crypto index ETF, the first proposal not related only to Bitcoin, but covering a basket of 10 digital assets.