Many bitcoin enthusiasts and exchange traded fund investors woke up Friday, eagerly awaiting what many thought would be regulator’s greenlight to a the first every bitcoin ETF. However, the Securities and Exchange Commission quickly dashed hopes on grounds surrounding the uncertainty in the underlying crytpocurrency.
After four years of going through regulatory hurdles, Tyler and Cameron Winklevoss’s Winklevoss Bitcoin Trust ETF (BATS: COIN) was given a final decision from a prolonged SEC vetting period.
In the anticipation of the closely monitored SEC decision on the bitcoin ETF, bitcoin prices traded as high as $1,325.81 Friday, compared to about a $296 price a year ago. However, bitcoin prices quickly plunged to $1,057 after the SEC nixed the idea of an ETF that targets bitcoin prices.
“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 b designed to prevent fraudulent and manipulative acts and practices and to protect investors and public interest,” according to an SEC ruling.
The SEC stated that for a commodity trust exchange traded product to be list, it must satisfy two requirements: “First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.”