It was always going to be a long shot: The Winklevoss twins tried their hardest to get Bitcoin accepted as an ETF (Exchange Traded Fund), a move which would have given them access to the New York’s prestigious Nasdaq Stock Market. Alas, the news broke earlier today (July 26) that those old killjoys the SEC had blocked such a move taking place.
Winklevoss Capital Management gave it their best shot, but their dream of making crypto history came to an end on Thursday. The company is the brainchild of illustrious Olympic rowers turned tech entrepreneurs the Winklevoss twins, Cameron and Tyler. They were aiming to take Bitcoin to the Stock Market, via registering the cryptocurrency as an ETF (Exchange Traded Fund). However, their application for the “Winklevoss Bitcoin Trust Commission” and what could have been the first ever crypto ETF was rejected a second time by the SEC on Thursday.
Second SEC Rejection In 18 Months
The SEC (Securities & Exchange Commission) had previously rejected a similar application in 2017, but an improved application was resubmitted in June, which included a proposal for a rule change. However it proved to be of no avail: According to a press release which came out on Thursday, the SEC stated it did not agree with the Winklevoss’ twins belief that cryptocurrency markets are “uniquely resistant to manipulation”, and they persisted with their concerns regarding fraud and investor protection, stating that Bitcoin “has not met its burden under the Exchange Act.”
Expanding on those points, the SEC said on Thursday that it wasn’t convinced that potential Stock Market trading of the world’s largest cryptocurrency came with adequate surveillance and that Cboe Global Markets Inc., the holding company which would have listed the Bitcoin ETF had failed to show proof that the underlying crypto market was “resistant to manipulation.”
The Bitcoin ETF’s value would have been determined from trading on the Winklevoss twins’ Gemini exchange, and early speculation was that the project would have been massively successful. A Bitcoin ETF would have opened up the market to a far wider range of institutional investors.
SEC Rejection Raises Serious Bitcoin Security Concerns
However, news of the SEC’s rejection of the ETF project had an immediate impact on the much maligned crypto market, which had been enjoying something of a renaissance of late. Bitcoin’s fall was particularly dramatic – from a very encouraging price of $8,431 it fell by around 4% to $7,848.46 within 24 hours.
While the rejection of the Winklevoss/ Cboe Global proposal for a second time in 18 months is devastating for the twins and the crypto industry, it nevertheless raises some serious security concerns. The SEC clearly have grave doubts as to the standard of reliability of trading and accumulated volume data that can be provided by Bitcoin. SEC staff specifically called into question the ability of Bitcoin exchanges to sufficiently police their own trading. These are points that must be investigated and rectified before a third crack at Bitcoin gaining ETF status.