Published: Mon, March 13, 2017
Money | By Oscar Reynolds

Why The Bitcoin ETF Denial Is Actually A Good Thing

Why The Bitcoin ETF Denial Is Actually A Good Thing

The US Securities and Exchange Commission has denied a request to list what would have been the first US exchange-traded fund built to track Bitcoin, sending the price of the digital currency plunging.

The Winklevoss twinsmet with the SEC on February 14 to discuss the possibility of allowing their Winklevoss Bitcoin Trust to trade on the Bats BZX Exchange, an alternative to the New York Stock Exchange and the Nasdaq.

The digital currency bitcoin is now more valuable than gold - and investing in it may soon become a lot simpler.

Almost four years ago, Cameron and Tyler Winklevoss-known for slapping a lawsuit on Facebook founder Mark Zuckerberg-applied for the digital currency ETF with the SEC. "Should such markets develop, the Commission could consider whether a bitcoin ETP would work, based on the facts and circumstances presented", the SEC said in its order.

"The commission notes that Bitcoin is still in the relatively early stages of its development and that, over time, regulated Bitcoin-related markets of significant size may develop".

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

Bitcoin's price has grown dramatically over the a year ago as public accessibility to the digital currency continues to rise. There's only a small constituency of individuals that even understand what bitcoin is, let alone how to trade it and transact it. This is because it seems that the regulators didn't take issue with the Winklevoss application, they were just concerned with the lack of regulation surrounding bitcoin in general. "We began this journey nearly four years ago, and are determined to see it through". They announced plans to create a Bitcoin ETF in 2013, and their proposal has been working its way through the SEC ever since. "We agree with the SEC that regulation and oversight are important to the health of any marketplace and the safety of all investors", he said. For a bitcoin though, we think this is going to be immaterial for the future and we continue to see the price of bitcoin rising over $2000 and eventually toward the $5000 mark within a couple of years.

Bitcoin suffered another blow to its legitimacy late on Friday, when United States federal regulators rejected a bid to push the online currency to a bigger pool of investors.

SolidX Partners, a U.S. technology company that provides blockchain services, also filed its ETF application a year ago.

Bats, which would have hosted the proposed fund's trading on its BZX Exchange operated by CBOE Holdings, is "reviewing the SEC's notice very intently and will have no further comment", said spokeswoman Hannah Randall.

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