Bitcoin drops as U.S. regulators reject Winklevoss ETF plan
- Author: Eleanor Harrison Jul 30, 2018,
Jul 30, 2018, 3:36
Another commenter asserts that the Gemini Exchange has relatively low liquidity and trade volume and that there is a significant risk that the nominal ETP share price will be manipulated by relatively small trades that manipulate the bitcoin price at that exchange.
Bats BZX is in nearly the same position as past year, when it was first rejected. The SEC Division of Trading and Markets disapproved the proposed rule change. Back in June 2016, for this objective they sent an application for changes to the rules of the BATS Global Exchange, where fund's shares should have been traded. More institutional participation would ameliorate numerous Commission's concerns with the Bitcoin market that underlie its disapproval order.
And the CTC said its decision to oppose the proposed rule change needed to enable the Winkelvoss ETF to be listed, was not based on whether or not blockchain technology and bitcoin had value as innovations and investments.
"I am concerned that the Commission's approach undermines investor protection by precluding greater institutionalization of the Bitcoin market".
The news dampened hopes the agency would soon approve a bitcoin fund, which had been fueling a recent rally across the market for digital currencies. "Even if the Gemini Exchange were "regulated, ' the record does not support a finding that the Gemini Exchange represents a 'significant" bitcoin-related market". Additionally, the SEC noted that there were high levels of manipulation in cryptocurrency markets, which are conducted primarily by "unregulated" markets that exist overseas, away from the prying eyes of US regulators. In other words, allowing the first Bitcoin ETF to launch would improve the Bitcoin market precisely in the way the SEC would want it to. "It does not engage in any activities created to obtain a profit from, or to ameliorate losses caused by, changes in Bitcoin price".
In addition, the SEC rejected the resubmittal due to concerns regarding fraud and investor protection, citing that "it has not met its burden under the Exchange Act". SEC Chairman Jay Clayton and the agency's two other commissioners voted to block the ETF request.
There has to be a first step taken, and it has to come from the SEC because without the favorable ruling we most likely will not see the issues that are reason enough to prevent said ruling in some Commissioners eyes ever being dealt with to a satisfactory level. She also stated that the exchange has the ability to halt trading in response to "market conditions that are inconsistent with the maintenance of a fair and orderly market".
Yet, it's also important to note that that the CBOE-filed Bitcoin ETF application is still pending approval.
Investor access to the products is a critical component in the SEC's decision, as their main intention is to protect unsavvy investors from risky investments.