Hours after the SEC officially announced that it rejected a proposed Bitcoin ETF that was submitted by the Winklevoss Twins, the Bitcoin price reacted – dropping below $8,000 and stopping the (bullish) momentum.
After reviewing the application for a second time – with an included appeal from the Gemini co-founders Cameron and Tyler Winklevoss – the SEC opened a fresh round of public comment and officially rejected the application for a Bitcoin exchange-traded fund.
The last rejection for the same Bitcoin ETF by the SEC was in March 2017. However, the new ETF submission was modified by the Winklevoss twins, after which the SEC performed a completely “new” review with the revised application – meaning that they treated it like an entirely new application.
In order to combat the comments on the first ETF rejection, the new application stated the following:
“The geographically diverse and continuous nature of bitcoin trading makes it difficult and prohibitively costly to manipulate the price of bitcoin”13—and that therefore the bitcoin market “generally is less susceptible to manipulation than the equity, fixed income, and commodity futures markets.”
However, we did not see the SEC buying these comments. Instead, they argued that the “surveillance-sharing agreement” is a necessary protection against fraud and manipulation. According to them, Bitcoin does not have sufficient surveillance built to prevent fraud.
Some of the additional reasons for the rejection revolve around Bitcoin’s current market regulations and the fact that they are still in their early phases. However, SEC concluded that they are open to future applications that have sufficient modifications to support the surveillance agreement.
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