The U.S. Securities and Exchange Commission earlier this week stood by its move to stop a bitcoin exchange-traded fund, citing “unpersuasive” arguments as to how the ETF would be protected from any market manipulation.
Reuters, citing a 92-page analysis by the SEC of the bitcoin ETF — which was created by Cameron and Tyler Winklevoss, the twin brothers who started Gemini Trust, a cryptocurrency exchange — reported the SEC wasn’t convinced the ETF couldn’t be manipulated. Nor was the SEC convinced investors would be protected from manipulation in the underlying asset class. “Regulated bitcoin-related markets are in the early stages of their development,” the SEC said in the report, according to Reuters, noting it “cannot…conclude that bitcoin markets are uniquely resistant to manipulation.” Reuters noted that the SEC didn’t kill the idea of bitcoin ETFs completely, with five or more bitcoin ETFs still awaiting approval from the SEC.
The move to block the ETF came down to a 3-1 vote of sitting commissioners, with Commissioner Hester Peirce a dissenting vote. In a statement to Reuters, Peirce said she thinks the ETF met the standards put in place by law. “More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order,” she said, adding that the ruling “sends a strong signal that innovation is unwelcome in our markets.”
According to the report, the SEC said the Winklevoss brothers didn’t provide enough evidence of how the ETF investors would be protected. The SEC had blocked the ETF last year — the ruling was then appealed by CBOE’s Bats exchange, which wanted to list the ETF, reported Reuters. “Investors are better served by products traded on a regulated securities market and protected by robust securities laws, and we will continue to work with the SEC and ETF issuers to construct a fully regulated product,” Chris Concannon, chief operating officer of CBOE Global Markets, told Reuters. The Winklevoss twins are famous for their battle against Facebook, in which they allege Mark Zuckerberg stole the idea for the social media network.