The Securities and Exchange Commission (SEC) rejected the Winklevoss twin’s bid to list their Bitcoin exchange-traded fund (ETF) citing concerns that Bitcoin’s largest markets are unregulated and pose risk of “fraudulent and manipulative acts”. The price of Bitcoin fell sharply following the announcement, but has since recovered much of those losses.
According the the official announcement found here the SEC said:
As discussed further below, the Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.
The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.