Bitcoin is down 3.8% at $7,945, falling back in response to the news last night that an exchange traded fund (ETF) from the Winklevoss twins has been rejected by the US Securities and Exchange Commission (SEC). Bitcoin has reached recent highs above $8,400 but has failed to hold those gains.
Cameron and Tyler Winklevoss were trying to get new rules introduced. The proposals would have allowed their “Winklevoss Bitcoin Trust” to get round the problems the regulator had with approving the passive vehicle. The SEC has previously pointed to the lack of transparent trading venues with adequate supervision and surveillance as an issue. That, and the corresponding poor price discovery, are just some of the reasons why an ETF at this time would not be appropriate as regulators see it. Specifically the SEC cited “offshore manipulation” as a factor in their decision, guided by overriding investor protection concerns. One of the SEC commissioners Hester M. Pierce dissented from the decision of the other three commissioners: “Apparently, bitcoin is not ripe enough, respectable enough, or regulated enough to be worthy of our markets. I dissent: ”
Five bitcoin ETFs from Direxion seeking approval from the SEC had their cases delayed earlier this week.
ETF approval realism
The news reminds market participants that the struggle to get a bitcoin ETF past the regulator has not necessarily suddenly become any easier than it a year ago. With a US Justice Department investigation currently underway into market manipulation of the crypto markets, it suggests that until the extent of the problem, if any, is known, there is unlikely to be any forward movement by the SEC in approving a bitcoin ETF at this time.
However, the Winklevoss gambit is a long shot and other applications take different routes. The VanEck Solid X offering that has been getting most of the attention recently, is seeking to address regulator concerns with settlement prices and asset custody. In addition, a rule change concerning the way ETF applications are made in the first place, with some room for plain vanilla wrappers for more esoteric funds being introduced, may help to concentrate minds in a more positive direction.
Bitcoin dominance is at 47% and the market cap of the overall crypto sector stands at $289 billion.
The only top altcoin moving north is VeChain following the VeChain Thor mainnet launch. The token is 15% higher in the past 24 hours trading at $2.39, making it the 17th-placed asset by market cap. The VEN is swapping 1:1 for VET.
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK’s second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane