ETF recognition eludes bitcoin, prices crash

The thought process is that people were believing this bitcoin ETF would increase demand for the digital currency and the price would appreciate further. The cryptocurrency has gained a lot of momentum in the last two years and there are now two other Bitcoin ETF approvals submitted to the SEC.

While there are two more bitcoin ETF applications still in a review period, the outlook isn't good.

The Winklevoss twins are best known for their feud with Facebook founder Mark Zuckerberg over whether he stole the idea for what became the world's most popular social networking website from them. Last year, NY state approved regulations governing a new exchange operated by Gemini for a virtual currency called Ether. In order for such a product to have met this standard, the SEC wrote in a filing, "the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity". The ETF was disapproved, because the proposed rule change to the BATS Exchange was "not consistent with these legal requirements".

Bitcoin has always been a gamble - with a volatile price and uncertainties regarding regulation - and so would an investment in the cryptocurrency now. The value of a single bitcoin is determined by investor speculation. "It is reassuring that the SEC did their job in properly protecting the market". From the high hopes of getting an approval to launch an ETF which momentarily pulled up the prices above gold on 3 March to a huge crash on late Friday.

The Securities and Exchange Commission's pending decision on what would be the first exchange-traded fund (ETF) for bitcoin price tracking in the United States is generating a lot of buzz as the date of the decision draws near. "We began this journey nearly four years ago, and are determined to see it through", Tyler Winklevoss said, as quoted by Reuters.

It looks like the government isn't a huge fan of bitcoin as an investment vehicle.

The decision to turn down the EFT, which would have significantly improved the liquidity of bitcoin, caused the price of the crypto currency to plummet.

SolidX Partners, a USA technology company that provides blockchain services, also filed its ETF application past year.

The regulators have questions and concerns about how the funds would work and whether they could be priced and trade effectively, according to a financial industry source familiar with the SEC's thinking. Agency staff has so-called delegated authority to effectively approve new ETFs without a vote by commissioners. Basically the SEC feels that bitcoin is to unregulated to be traded publicly on open and regulated exchanges.

  • Anthony Vega