The U.S. Securities and Exchange Commission (SEC) has yet to be convinced that a bitcoin exchange-traded fund (ETF) is a reasonable investment vehicle. News at the end of last week reported on by CNBC shows that the SEC opted to decline a second attempt by Cameron and Tyler Winklevoss to launch a bitcoin ETF on a regulated exchange. The Winklevoss twins, who came to prominence for their role in the development of Facebook (FB), have gone on to create Gemini, one of the most innovative and talked about digital currency exchanges.
June Proposal Rejected
The Winklevoss brothers most recently filed a proposal for Winklevoss Bitcoin Trust in June of this year. That proposal, from BATS BZX Exchange, attempted to list and trade shares of the bitcoin ETF. The commission voted down the proposal 3-1 on Thursday of this week.
This marks the second failed attempt at launching a digital currency-based ETF for the Winklevoss brothers. Last year, the SEC declined to approve an application for the Winklevoss Bitcoin Trust as well. The brothers revised their proposal for the June submission this year.
Manipulation Still a Primary Concern
In the most recent proposal, the Winklevosses suggested that bitcoin markets including their own Gemini exchange, were "uniquely resistant to manipulation." The SEC disagreed with this claim, citing issues with fraud and investor protection as well as arguments against approving the ETF. However, the SEC was careful to emphasize that the decision in this case does not rest on an evaluation of whether or not bitcoin has value inherently.
Still, the decision makes clear that the SEC is focused on preventing the opportunity for fraud or manipulation in order to protect investors. Cameron Winklevoss, the co-founder and President of Gemini stated that "despite today's ruling, we look forward to continuing to work with the SEC and remain deeply committed to bringing a regulated bitcoin ETF to market and building the future of money."
As of this writing, the SEC has yet to approve a digital currency-based ETF. In the decision, the SEC noted that more than 75% of the volume of bitcoin trading occurs outside the U.S., with only 5% of trading taking place on U.S. exchanges. The price of bitcoin dipped by about 3% following the news.
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