The Securities and Exchange Commission (SEC) has rejected a second attempt by Cameron and Tyler Winklevoss to list the first-ever cryptocurrency ETF on a regulated exchange.
The decision caused a shockwave through the cryptocurrency markets, with the price of Bitcoin falling three per cent to $7,880 according to data from Coinbase.
Details of the Winklevoss twins’ proposals
Last year, an initial application for the “Winklevoss Bitcoin Trust” was rejected by the SEC, as it was unnerved by the lack of regulation in a market not only prone to manipulation, but also largely based outside of the US.
In June 2018, a second application from BATS BZX Exchange to list and trade the Winklevoss Bitcoin Trust’s commodity-based shares included a proposed rule change.
However, the SEC said in a release that it did not support the notion that bitcoin markets, including the Gemini Exchange, are “uniquely resistant to manipulation.” Once again, the agency also highlighted issues of fraud and investor protection.
The US financial watchdog noted that more than three-fourths of the volume in Bitcoin occurs outside the United States, and that 95 percent of the volume occurred on non-U.S. exchanges.
In a 3-1 decision, only Commissioner Hester M. Peirce dissented.
“More institutional participation would ameliorate many of the Commission’s concerns with the Bitcoin market that underlie its disapproval order,” she wrote in a statement, adding that the decision “sends a strong signal that innovation is unwelcome in our markets.”
Will there ever be a cryptocurrency-based ETF?
Following the decision, Cameron Winklevoss, co-founder and president of Gemini, was defiant in his vision for a regulated Bitcoin ETF.
“Despite today’s ruling, we look forward to continuing to work with the SEC and remain deeply committed to bringing a regulated bitcoin ETF to market and building the future of money,” he said in a statement.
As of yet, the SEC hasn’t approved any cryptocurrency-based ETF. Back in January, it said there were “significant investor protection issues that need to be examined” before sponsors could offer these funds to retail investors.
Currently, there is another Bitcoin ETF application still active – the VanEck SolidX Bitcoin Trust. The SEC needs to take action within 45 days of the proposal’s application, which falls on 16th August.
But in the opinion of Maxim Nurov, a fund manager at Black Square Capital, the SEC won’t approve a Bitcoin ETF anytime soon.
“The main focus of the SEC is investor protection,” Nurov told CNNMoney. He also revealed that the Gemini ETF share price was entirely dependent on the Bitcoin price on Gemini’s own exchange.
Current state of Bitcoin
Despite the fact that the price of Bitcoin went below $8,000 in the immediate aftermath of the decision, the market has since recovered.
As of 31st July, the valuation of the crypto market was $295 billion, with the price of Bitcoin at $8,150.
The dominance index of Bitcoin, which evaluates the dominance of Bitcoin over the entire cryptocurrency market, also increased to 47.5 per cent, its highest level since early January.