SEC rejects bitcoin ETF proposal from Winklevoss brothers

SEC rejects bitcoin ETF proposal from Winklevoss brothers

The ripples of the SEC's rejection of Bitcoin ETF were soon felt in the crypto markets as the strong going Bitcoin in last one week corrected by almost 4% slipping below its crucial $8000 support. Commissioner Hester Pierce broke with her colleagues, dissenting from the rejection. The decision is a setback for Bitcoin enthusiasts, since many observers expect that a regulated Bitcoin ETF would lead to an influx of institutional investors and, in turn, further legitimize the market. SEC Chairman Jay Clayton and the agency's two other commissioners voted to block the ETF request. More importantly, 95% of the Bitcoin trading volume occurs in non-US exchanges.

While there are numerous other bitcoin-related ETF proposals now lodged with the SEC, those of VanEck and SolidX have generated by far the most attention - with several hundred comments submitted regarding the proposals on the SEC website.

She argued that the approach by the SEC undermines the principles of investor protection.

"A SEC approved fund provides huge credibility for safe investment, in a market where both fund managers and wealthy individuals are reluctant to invest due to safety concern."
Dissenting voter, Commissioner Hester M. Peirce, felt that the inclusion of institutional investors in the market would allay numerous fears the SEC has over cryptocurrencies. In addition, San Francisco-based asset management company Bitwise recently filed for "the first publicly-offered cryptocurrency index exchange-traded fund (ETF)".

The SEC's reasons for not approving the product is because they think that the Bitcoin market as a whole is subject to manipulation, said Peirce. "Because adequate surveillance-sharing agreements are not in place - and any current surveillance-sharing agreements are with bitcoin-related markets that are either not significant, not regulated, or both- the Commission concludes that the proposal is inconsistent with Exchange Act Section".

The SEC rejected an application for the "Winklevoss Bitcoin Trust" past year, but the application was resubmitted in June, which included a proposed rule change.

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Winners in the down market right now include Neblio (+20.85%) and VeChain (+19.32%), which has surged after Binance, the world's most popular cryptocurrency exchange, announced that it will airdrop 100 million VeThor (VTHO) to holders of VeChain (VET) on their platform.

Mainly, Peirce stated that the disapproval order would stunt the entry of institutionalization into the cryptocurrency market. Unlike the earlier ruling, which caused the price of Bitcoin to plummet, the decision appears to have had only a small effect on the market.

At 8:56 a.m. ET, the red-hot coin was trading down 1.35% at $7,840.

"As regulators, our rule is not to judge the value of what an investment is, it's to give people the opportunity to make those judgments themselves", Ms. Peirce said on the Bloomberg Markets AM show.

"The disapproval order discourages new institutional participants from entering this market".

A review of the 92-page decision suggests the agency was skeptical of the specific arrangement proposed by the Winkelvoss twins, and not because of an underlying hostility to Bitcoin in general. Following the rejection, Bitcoin plunged by more than $400 to trade at $7,800 levels.

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