The application for a Bitcoin exchange-traded fund (ETF) by Tyler and Cameron Winklevoss has been denied by the U.S. Securities and Exchange Commission (SEC). This was based on a previous SEC press release.
In 2016, Bats BZX Exchange, Inc. (BZX) sought a proposed rule change with the SEC to let it be listed and trade shares of the Winklevoss Bitcoin Trust. Back in 2017, the initial application for a Bitcoin ETF by the Winklevoss twins’ was discarded by the SEC. The main reason was the unregulated nature of Bitcoin (BTC) markets then.
The SEC noted, ”When the spot market is unregulated—there must be significant, regulated derivatives markets related to the underlying asset with which the Exchange can enter into a surveillance-sharing agreement.”
After the disapproval of the first proposition, they have filed a petition urging the Commission to review the disapproval by a delegated authority.
Recently, the SEC passed a decision that rejected the petition. In response to the Winklevoss’ claim that the crypto industry is “uniquely” free to manipulation, the agency noted the record from the Commission does not support such conclusion.
The agency stressed rejecting the petition did not tackle whether cryptocurrencies or blockchain technology has a utility or value as an innovation or an investment.
The Commission cited the agency’s disapproval of the proposed rule change considering BZX did not achieve its burden under the Exchange Act and the Commission’s Rules of Practice to show that its proposal is aligned with the requirements of the Exchange Act. In particular, the requirement of the rules needs to be designed to avoid fraudulent and manipulative acts and practices.
The SEC cited its concern that a major part of Bitcoin trading occurs on “unregulated exchanges outside the U.S.,” apart from issues over low liquidity.
Although receiving several requests to approve the Bitcoin ETF from many applicants, the SEC did not allow any of them as of this writing.