The SEC just issued their ruling on the Winkelevoss bitcoin ETF, and it wasn’t good news for enthusiasts of the digital currency. Regulators rejected the proposed application, mainly because of the lack of regulation currently surrounding bitcoin.
An approval would have meant that the public could invest in bitcoin simply by purchasing shares in the ETF, which would trade on a U.S-based stock exchange.
The assumption was that an approved ETF would open the floodgates to both Wall Street and regular investors who want a stake in the digital currency but didn’t feel comfortable purchasing it on their own. This influx of new investors would then drive up the price of bitcoin.
Instead, the price dropped about 22 percent, from about $1,295.00 to as low as $1,000 as soon as the news broke. It’s since stabilized to about $1,120.00, which is still a drop of about 14 percent.
In its decision, the SEC explained that a Bitcoin ETF would not be consistent with current rules requiring securities exchanges to regulate and monitor the markets where underlying products are traded. Essentially, the underlying markets that currently exist for trading bitcoin aren’t regulated enough to responsibly support an ETF that would rely on those markets for liquidity.
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