SEC rejects Bitcoin ETF proposal, BTC goes below $8,000
U.S. Securities and Exchange Commission (SEC) announced that it has rejected the proposal of Bitcoin ETF that was submitted by the Winklevoss Twins, post announcement. The price of Bitcoin dipped below the $8,000 mark, CCN reported.
The application was reportedly reviewed by the SEC for the second time after Gemini co-founders Cameron and Tyler Winklevoss appealed. In fact, for the second review, SEC started a round of public comment. Previously, on March 10, 2017 the initial application was rejected.
The parts of the application that was highlighted as problematic in the first review were modified. According to CCN report, SEC regulators treated the modified application as new one (de novo).
Why was ETF rejected?
In 2017, the first application submitted to the SEC was the Bats Exchange ETF, with the ticker symbol BXZ. The SEC reportedly followed Exchange Act Section 6(b)(5) when they were taking the decision of whether to accept it or not.
The points which were considered for BXZ ETF includes whether the exchange can “prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.” Regulators even launched an investigation in May to check whether bitcoin price movement was manipulated or not.
According to SEC, bitcoin did not do anything about manipulation and also the technology did not provide efficient tools to prevent money laundering and fraud.
After the first rejection, the new application stated, “The geographically diverse and continuous nature of bitcoin trading makes it difficult and prohibitively costly to manipulate the price of bitcoin.” Therefore, the bitcoin market “generally is less susceptible to manipulation than the equity, fixed income, and commodity futures markets.”
Applicants argued that SEC depended other ETFs’ surveillance agreements, which were approved in the past. However, SEC did not agree with it. According to SEC, “surveillance-sharing agreement” is a necessary for safety against fraud, manipulation and money laundering.
However, SEC in an hopeful tone stated that bitcoin market regulations are in the early phases and they are reportedly keeping a watch on the derivative markets and their popularity. They have also mentioned that SEC is open to further modified application in future that supports the surveillance agreement.
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