One of the reasons why Bitcoin is on the rise is because of the possibility of having Bitcoin ETFs getting approved by the US Securities and Exchange Commission. At one point this week, it was even able to cross $8,500.
This was big news considering Bitcoin slumped below $6,000 in June. However, things cooled down a bit for Bitcoin as it returned below $8,000 following the rejection of the Winklevoss Twins’ attempt to have a first-ever Bitcoin ETF. Keep in mind that there are a number of ETF applications lined up already.
The proposal from Winklevoss twins came in June. It was from BATS BZX Exchange. The proposal is to list and trade the Winklevoss Bitcoin Trust’s commodity-based shares. And the US SEC shut down the proposal with a vote of 3-1. Right after the rejection, the price of Bitcoin dipped by 3{4ede17fdd9b4ce8121d01fc4b54913fe84f8215aace504cc657695cefb5329ff} and went to $7,880.
Not The First Time
It isn’t the first time that the Cameron and Tyler Winklevoss experienced rejection from the US SEC. Last year, the twins filed for their Winklevoss Bitcoin Trust. The initial application was rejected March. As for the Winklevoss, they opted to modify parts of the application. The twins decided to ask for a rule change. They took a closer look at the highlighted mistakes the first time around.
However, the agency released a statement on Thursday that it isn’t supporting the argument of the Winklevoss that bitcoin markets are considered “uniquely resistant to manipulation”. They also highlighted issues that provide protection to investors especially fraud.
However, the SEC emphasized that they the disapproval doesn’t mean that the agency thinks that blockchain technology or Bitcoin has no use as an investment or innovation. Rather, the SEC simply wants to prevent fraud and price manipulation and ultimately watch over the interest of investors.
Also, it is worth mentioning that the SEC performed a complete “de novo” review. This means that the regulators treated this application by the Winklevoss’ as a brand new application.
Importance of Investor Protection
The US Financial watchdog is concerned about investor protection. And for this reason, this is why the agency is still looking at things closely. It even published a letter last January regarding “significant investor protection issues that need to be examined”. Once this hurdle has been cleared, then is the only time that we can see SEC to sponsor these funds to retail investors.
A Push Towards Regulatory Clarity
Though the US SEC has been tiptoeing regarding ETFs, it is true that they have considered Bitcoin and that of Ethereum not as securities. This is big news in the crypto world since these cryptos won’t have to follow rules and regulations applied on investment vehicles. And though only two cryptocurrencies were mentioned, it still is considered progress.
In fact, the third largest cryptocurrency, Ripple is facing different lawsuits. The lawsuits claim that Ripple is a security and there are also allegations of price manipulation.
Winklevoss’ are doing a good job when it comes to fighting the SEC’s rejection. The last application that was rejected stated that: “The geographically diverse and continuous nature of bitcoin trading makes it difficult and prohibitively costly to manipulate the price of bitcoin”13—and that therefore the bitcoin market “generally is less susceptible to manipulation than the equity, fixed income, and commodity futures markets”.
