The SEC has rejected a second proposal to list and trade shares of the Winklevoss Bitcoin Trust on the Bats BZX Exchange, which would essentially be the launch of the first Bitcoin ETF. The same thing happened to BATS a year ago when the regulatory agency rejected its product in the exchange market.
The bulls won the battle, opening the floodgates for a several-hundred-dollar rally.
The price of Bitcoin was at $8,133.14 as of 5:30 p.m. ET-up over 30% since the end of July.
The points which were considered for BXZ ETF includes whether the exchange can "prevent fraudulent and manipulative acts and practices" and "to protect investors and the public interest".
Launching a bitcoin ETF could make it easier for investors to gain exposure to the cryptocurrency, analysts have said.
SEC Commissioner Hester Peirce wrote a dissension to the decision, saying she believes "the proposed rule change satisfies the statutory standard and that we should permit BZX to list and trade this bitcoin-based exchange-traded product ('ETP')".
"The Commission notes that regulated bitcoinrelated markets are in the early stages of their development".
"More institutional participation would ameliorate numerous Commission's concerns with the bitcoin market that underlie its disapproval order", she wrote in a statement, adding that the decision "sends a strong signal that innovation is unwelcome in our markets".
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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".
One member of the four-person commission voted to bless the Winklevoss initiative.
"The disapproval order discourages new institutional participants from entering this market".
Peirce's dissent is interesting, as it shows how the SEC might be swayed to change its decision on cases like this in the future.
The Commission emphasizes that its approval does not rest on an evaluation of whether Bitcoin or blockchain more generally has utility or as an innovation or an investment, the agency stated.
The move comes more than a year after the SEC turned down a rule change request from the Bats BZX Exchange that would have paved the way for the bitcoin-tied investment vehicle.
The SEC released a filing on its decision, stating that the arguments put forward by BZX to justify the safety of the funds are not sufficient to eliminate fears of price manipulation.