Economy

Crypto Market Retreats After SEC Rejects Winklevoss Bitcoin ETF Again

Crypto Market Retreats After SEC Rejects Winklevoss Bitcoin ETF Again

Bitcoin has witnessed a spike in the price recently after the speculation that the SEC would sign off on an Exchange Traded Fund.

Just this week, the Winklevoss twins application for Bitcoin ETF was rejected by SEC, in a vote of 3:1, citing reasons of protecting investors, manipulation and fraud for factors behind the unsuccessful application. While many are, of course, disappointed with the rejection of the rule change request, the SEC left room for potential improvement in the future as the industry shifts.

If passed, the Winklevoss' proposal would have had commodity-based shares from the Winklevoss Bitcoin Trust traded on the BATS BZX Exchange.

It also highlighted issues of fraud and investor protection; suggesting that the SEC is on a mission to prevent fraudulent or manipulative acts and practices, and it's primary concern is to protect investors.

"More institutional participation would ameliorate numerous Commission's concerns with the bitcoin market that underlie its disapproval order", she said.

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"I am concerned that the Commission's approach undermines investor protection by precluding greater institutionalization of the Bitcoin market".

The U.S. Securities and Exchange Commission on Thursday stood by a decision to block an exchange-traded fund (ETF) that would have tracked bitcoin. "Accordingly, I would set aside the action the staff took by delegated authority in this matter and approve the proposed rule change".

Pierce also believes that the Commission is positioning itself as the gatekeeper when it comes to judging whether a certain type of technology is ripe and respectable enough to be worthy of the securities market. Additionally, the SEC noted that there were high levels of manipulation in cryptocurrency markets, which are conducted primarily by "unregulated" markets that exist overseas, away from the prying eyes of USA regulators.

The twins are major holders of bitcoin, and were considered to be "bitcoin billionaires" back when the price of bitcoin was near its heights earlier this year.

However, not everyone at the SEC was on board with the recent decision to deny bitcoin exchange traded funds.

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Bitcoin's roller-coaster ride follows a frenzy of speculation on the prospects for an ETF that's helped the largest virtual currency rise more than 30 per cent since the start of July.

For comparison, the proposals file by Boston-based ETF provider Direxion Investments at the time of writing have prompted only three comments.

This time regulators said the underlying bitcoin market, on which the fund would be based, is too susceptible to manipulation, noting: "BZX has not demonstrated that the structure of the spot market for bitcoin is uniquely resistant to manipulation".

At the same time, the SEC received another application for registration of ETF, which is focused on the ten most liquid cryptocurrencies at once.

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