SEC Rejected Winklevoss Bitcoin ETF Application Again
U.S. Securities and Exchange Commission (SEC) rejected the application of the Winklewoss brothers to create an bitcoin index fund (ETF) once again.
SEC has made decision a year after it rejected a request for changing the rules from the Bats BZX Exchange, which could pave the way for investment tools tied to bitcoin. Shortly thereafter, the Bats filed a petition to review the decision, prompting another wave of comments (and expectations) about the SEC's willingness to meet new market realities.
Nevertheless, according to the decision published on July 26, the SEC's "concern" remained the same. Commission emphasized that the decision does not reflect the SEC's attitude to cryptocurrency and blockchain as a whole and "their values as innovations or investments", but rather relates to the structure of the application:
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.
In conclusion, the SEC left opportunity for potential approval of such products in the future, noting that "over time, regulated markets associated with bitcoin can continue to grow and develop."
The SEC paid special attention to possible manipulation of the cryptocurrency market. The agency singled out a recent study in which it was claimed that Tether (USDT) was used to support the price of bitcoin in times of market recessions:
In one recent academic paper, the issue of increasing Tether's working assets (crypto-currency, which is declared as collateralized by the US dollar), driven by the demand of investors [...] was considered.
This decision affected the bitcoin price, which against the background of news fell from $ 8,300 to $ 7,985 (according to CoinMarketCap).