Bitcoin thrown lifeline by SEC Commissioner despite ETF rejection

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SEC is not bending its stance "because as discussed in details below, BZX has not met its burden, under the exchange act and the commission rule of practice, to demonstrate its proposal is consistent with the requirements of the Exchange Act section 6 (b) (5), in particular, the requirements that its rules be created to prevent fraudulent and manipulative acts by practices".

This is the second attempt by the Winklevoss twins, the founders of crypto-exchange Gemini, to list shares of what would be the first-ever bitcoin ETF.

In the hours after the decision, the price of Bitcoin fell to just under $8,000, representing around a 3% fall.

The decision, which was released Thursday in a 92-page document, said that the commission was not convinced that the twins' company could protect investors from "fraud and manipulation".

"Contrary to the Commission's determination, I believe that 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")", Peirce wrote.

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.

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Ms. Peirce deems this argument to be contradictory as decisions such as the one taken simply hamper the changes that SEC itself consider would be positive should they occur.

By suggesting that bitcoin, as a novel financial product based on a novel technology that is traded on a non-traditional market, can not be the basis of an ETP, the Commission signals an aversion to innovation that may convince entrepreneurs that they should take their ingenuity to other sectors of our economy, or to foreign markets, where their talents will be welcomed with more enthusiasm.

Attached with the tweet was her statement of dissent regarding the decision made by the SEC.

Ironically, the global nature of bitcoin's unregulated market heavily influenced the SEC's decision. The Bats requested a review of the order leading to another wave of expectations from investors that the SEC may accept a cryptocurrency based derivative.

The SEC's concerns are really just the same old exhausted excuses repeatedly trotted out by official regulatory bodies: Bitcoin and digital currencies like it are too susceptible to fraud and other market manipulations. More generally, the Commission's interpretation and application of the statutory standard sends a strong signal that innovation is unwelcome in our markets, a signal that may have effects far beyond the fate of Bitcoin ETPs.

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