The Bitcoin exchange-traded fund application filed by the Winklevoss brothers was officially rejected by the US Securities and Exchange cmomission on July 26. The SEC expressed its concerns with the EFT’s lack of measures to prevent price manipulation and further found that the record before the commission did not support BZX’s assertion that bitcoin and bitcoin markets, including the Gemini Exchange are uniquely resistant to manipulation. The SEC went on further to say that the US crypto exchange overseen by the Winklevoss brothers Gemini had inefficient tools to spot and deter fraud or price manipulation which could have a very negative impact for investors.
However at least one of the SEC commissioners Hester Peirce was disappointed with the decision of the agency and stated that “Bitcoin as an asset was regulated and matured enough to be worthy of US markets”. Ms. Pierce tought that the decision of the SEC was made prematurely and that it did not take into account the institutionalization of the Bitcoin market with increased investment interest from large institutions such as Goldman SAchs, JPMorgan and Morgan Stanley.
The SEC decision to reject the Winklevoss Bitcoin EFT weighted heavily on the Bitcoin price as it dropped by more than 4% within an hour, from $8315 to $7930. Previously in the week Bitcoin and the entire cryptocurrency market rallied strongly with large spikes in volumes, a surge from $3 billion to $6.3 billion. Many analysts attributed the rally to positive public sentiment which originated from the anticipated SEC’s approval of the Bitcoin EFT filed by the Chicago Board Options Exchange (Cboe) and hence demand from investors.
Now the unexpected move by the SEC has led many members of the cryptocurrency community to question the probability of the Cboe EFT approval.
In its statement the SEC disclosed that it had disapproved the Winklevoss EFT because they were not able to meet the requirements of the SEC, and in particular their involvement in the process of establishing value of the Bitcoin EFT.
It is therefore very likely that the Cboe EFT and any future filings will get approved in the future especially if they address the issues mentioned by the SEC.