Denied: Here is the SEC Order Denying the Winkelvoss Bitcoin Trust

The Bats BZX Exchange filed a proposed rule change to list and trade shares of the Winklevoss Bitcoin Trust. Yesterday, the SEC issued an order denying the request thus halting what could have been the first ETF designed to track Bitcoin. The news jarred the value of Bitcoin but the digital currency quickly regained its footing.

The Winkelvoss brothers helped to create Facebook with Mark Zuckerberg – who went on to monetize the social network. In a dramatic lawsuit, the Winkelvoss brothers won tens of millions of dollars in a financial settlement regarding the origin of Facebook.

CNBC quoted Tyler Winklevoss, on the SEC refusal;

“We remain optimistic and committed to bringing COIN to market, and look forward to continuing to work with the SEC staff. We began this journey almost four years ago, and are determined to see it through. We agree with the SEC that regulation and oversight are important to the health of any marketplace and the safety of all investors.”

The SEC denied the request as it found the proposed rule change as not consistent with the Exchange Act that says national securities exchange be designed to prevent fraudulent and manipulative acts and to protect investors:

“…the Commission believes that the significant markets for bitcoin are unregulated. Therefore, as the Exchange has not entered into, and would currently be unable to enter into, the type of surveillance-sharing agreement that has been in place with respect to all previously approved commodity-trust ETPs—agreements that help address concerns about the potential for fraudulent or manipulative acts and practices in this market—the Commission does not find the proposed rule change to be consistent with the Exchange Act.”

The SEC is swimming against the tide, though. National banks around the world are looking as to how they can better regulate or facilitate cryptocurrencies. China recently pushed forward with plans to launch a bespoke digital currency. The People’s Bank of China expects to become the first central bank to issue digital currency. On the other side of the debate, Canada has published a paper that warns against possible digital counterfeiting for Bitcoin. In brief, many regulators are flummoxed as to what do next. Meanwhile, innovation in digital currency advances…


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