SEC Sinks Bitcoin ETF Over Fears of Price Manipulation

SEC Sinks Bitcoin ETF Over Fears of Price Manipulation

SEC Sinks Bitcoin ETF Over Fears of Price Manipulation

The SEC said there was not enough evidence that efforts to thwart manipulation of the ETF's price or that of the underlying bitcoin market would be successful.

"Because BZX has failed to carry its burden, the proposed rule change must be disapproved", it said. (BZX) had for the first time filed an application to allow it to list and trade shares of the Winklevoss Bitcoin Trust. Given the vast, global scale of the market, there's no way to guarantee investor protections against fraud and manipulation, the SEC claims.

"The Commission is disapproving this proposed rule change because..."

The SEC also stressed that the rejection was not based on an assessment of whether Bitcoin or blockchain technology has inherent value as a path breaking technology or investment vehicle.

"This is a big shot across the bow for those seeking to launch digital currency exchange-traded products, You don't write 92 pages and undertake serious economic analysis unless you're trying to make a really important statement". The regulator pointed out that the Bitcoin futures markets is still relatively small, 20% the volume of platinum and only 2.5% that of silver. For example, a stock exchange listed on the European Technology Platform may demonstrate in a proposed change to the rules that it will be able to address the risk of fraud and manipulation by sharing surveillance information with a regulated market of significant size related to bitcoin.


Tom Alford's position is based on the change in perception about bitcoin, it's use and pricing as well as a striking resemblance between gold ETF and Bitcoin ETF. To date, no cryptocurrency-based ETFs have been approved, making this a major hurdle on the way to widespread adoption by Wall Street.

"This "overbought" condition becomes a bearish signal when a new high in price does not coincide with a new high in the RSI", for Bitcoin, said Craig Erlam, senior market analyst at online trading firm Oanda Corp.in London. The rest of the market which typically follows the price action of bitcoin has similarly retreated.

According to the SEC's document, BZX argues in its most recent proposal that the "geographically diverse and continuous nature of bitcoin trading makes it hard and prohibitively costly to manipulate the price of bitcoin", rendering it "generally ... less susceptible to manipulation than the equity, fixed-income and commodity futures markets".

Bats BZX finds itself in almost the exact same position as a year ago, when it was rejected the first time. All this time, the discussion about the regulator's readiness to approve the exchange product for bitcoin trading did not cease.

At the same time, the SEC received another application for registration of ETF, which is focused on the ten most liquid cryptocurrencies at once. I reject the part of gatekeeper of innovation-a role completely different from (and, certainly, inconsistent with) our objective of protecting traders, fostering capital development, and facilitating reasonable, orderly, and efficient marketplaces.

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