Winklevoss Bitcoin ETF Is a No Go from SEC

The Winklevoss twins, who amassed quite a fortune by trading bitcoin, have had their bitcoin ETF rejected by the Securities Exchange Commission this week.

It was the second attempt by Cameron and Tyler Winklevoss to list the first-ever cryptocurrency ETF on a regulated exchange. The two men are the founders of crypto exchange Gemini.

Bitcoin dragged below $7,900 shortly after the news after rallying for weeks on rumors that the SEC would approve the ETF or a similar trading vehicle.

The SEC made sure to note that the disapproval of the ETF does not rely on the evaluation that the cryptocurrency or blockchain as well has value as an investment nor innovation.

The SEC wrote, “Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because, as discussed in detail below, BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.”

The agency also said, “For example, existing or newly created bitcoin futures markets may achieve significant size, and an ETP listing exchange may be able to demonstrate in a proposed rule change 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, as well as, where appropriate, with the spot markets underlying relevant bitcoin derivatives.”