The SEC rejected an application for the "Winklevoss Bitcoin Trust" a year ago, but the application was resubmitted in June, which included a proposed rule change.
The reasoning of the SEC comes from whether the exchange could "prevent fraudulent and manipulative practices" as well as "protect investors and the public interest".
"The Commission is disapproving this proposed rule change because..."
In a press release detailing the decision, the organisation said: "The Commission is disapproving this proposed rule change because..."
Less than 24 hours after the U.S. Securities & Exchange Commission fuelled a slump in the virtual currency by rejecting plans to list such a fund, bitcoin rallied as Commissioner Hester Peirce expressed support for cryptocurrency ETFs in an interview with Bloomberg Radio. "Accordingly, I would set aside the action the staff took by delegated authority in this matter and approve the proposed rule change". Although Bats argued that the bitcoin market "generally is less susceptible to manipulation" because bitcoin trading happens around the world, continuously, the SEC said it was not persuaded. The SEC would rather grant an ETF to an existing institution over a new one. The exchange promptly filed a petition to review the March 10 decision, but it has now received another rejection, with the SEC voting the proposal down on Thursday.
As Aurelius explained, "the main reason for rejection was that the market has too much potential for manipulation in the eyes of the SEC - And thus doesn't meet the requirements of the Exchange Act".
A sudden drop in the price of BTC from $8,300 to $7,900 led other major digital assets and small market cap tokens to fall substantially in both value and volume.
A cryptocurrency-based ETF has not yet been received approval from the SEC.
But, the Winklevoss bitcoin ETF is not the ETF the cryptocurrency market has been anticipating since mid-July.
However, not everyone at the SEC was on board with the recent decision to deny bitcoin exchange traded funds. Despite a surge in bitcoin's popularity past year - prompting coin prices to hit more than $19,000 - the total market cap of all digital currencies still pales in comparison to the $30 trillion market cap of the us stock market. She noted the disapproval order demonstrates a skeptical view of innovation, which may have an adverse effect on investor protection, efficiency, competition, and capital formation well beyond the particular product.