Published: Mon, March 13, 2017
Markets | By Erika Turner

US SEC rejects application to list Bitcoin ETF, currency's price plunges

US SEC rejects application to list Bitcoin ETF, currency's price plunges

CBOE's Bats exchange had applied to list the ETF. It last traded down 7.8 percent to US$1098. Because of that, the exchange wouldn't be able to work with "significant, regulated" markets for trading bitcoin to properly oversee trading in the fund, the SEC said.

In the same vein, supporters insist the money is also "inflation proof": with a set number of bitcoins in the market, their value won't decrease due to an increasing supply. Worth nearly nothing when it was created eight years ago, bitcoin hit a record high above $1,300 this week, topping the price of an ounce of gold. "We agree with the SEC that regulation and oversight are important to the health of any marketplace and the safety of all investors", Tyler Winklevoss said in a statement.

The irrepressible Winklevoss twins, known for having sued Mark Zuckerberg over the idea for Facebook, have suffered a setback from federal regulators in their push to expand the use of bitcoin to a wider universe of investors. The former Olympic rowers ultimately settled their legal dispute, which was dramatised in the 2010 film The Social Network. "How do we develop well-capitalized and regulated markets in the USA and Europe if financial innovators aren't allowed to bring products to market that grow domestic demand for digital currencies like Bitcoin?" In the SEC's view, Bitcoin exchanges are not yet mature enough to justify opening them to the general public.

"We have spoken to a number of our investors, particularly from the USA, who have indicated to us that they have been buying bitcoin", Daniel Masters, portfolio manager of Global Advisors Bitcoin Investment Fund Plc, told Reuters.

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Analysts expected that SEC approval for the Winklevoss proposal would send Bitcoin's price soaring, as millions of ordinary investors suddenly had an easy way to buy into the Bitcoin market.

"As discussed further below, the Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6 (b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be created to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest", the SEC said in a statement. A lot of dreams were crushed when the SEC announced they have no intention of approving the rule change or facilitate a cryptocurrency ETF by any means. From levels of $1279.8 dollar per bitcoin it declined by 17% to $1063.3 in a span of 11 minutes on BitFinex, the largest bitcoin exchange in the world.

The Winklevoss' company is not the only planned bitcoin ETF, however.

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