The U.S. Securities and Exchange Commission (SEC) has once again rejected an effort by investors Cameron and Tyler Winklevoss to list a bitcoin ETF.
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. Shortly after, Bats submitted a petition to review that decision, triggering another wave of comments – and expectation – about the agency’s willingness to approve a cryptocurrency exchange-traded product.
Yet the concerns highlighted in that March decision don’t seem to have abated, according to the decision published Thursday by the SEC.
The agency notably highlighted that its decision doesn’t constitute a judgment against cryptocurrencies and blockchain in general, but rather the structure of the proposal that was pitched.
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.”
And as before, the SEC left the door open to potentially approving such products in the future, noting that “over time, regulated bitcoin-related markets may continue to grow and develop.”
“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,” the agency continued.
Should that happen, “the Commission would then have the opportunity to consider whether a bitcoin ETP would be consistent with the requirements of the Exchange Act.”