While there are numerous other bitcoin-related ETF proposals now lodged with the SEC, those of VanEck and SolidX have generated by far the most attention - with several hundred comments submitted regarding the proposals on the SEC website. However, in June, Gemini Group placed on SEC's table, a proposal for a rule change.
"I respectfully dissent from the Commission's order disapproving a proposed rule change, as amended, to list and trade shares of the Winklevoss Bitcoin Trust on Bats BZX Exchange, Inc". SEC thus claims that in such case there is no guarantee for the protection of investor's money against fraud and manipulations. More institutional participation likely to revolutionize numerous Commission's concerns with the bitcoin market that cause its disapproval order. She worries that "the Commission's interpretation and application of the statutory standard sends a strong signal that innovation is unwelcome in our markets". In a dissent released alongside the SEC's decision, Commissioner Hester Peirce said that by not bringing bitcoin investing into the mainstream, the agency would be missing an opportunity to institutionalize it and make the markets safer. "Accordingly, I would set aside the action the staff took by delegated authority in this matter and approve the proposed rule change".
As Bitcoin is traded in an unregulated offshore market, it represents a great concern for the SEC.
The regulator also says BZX must show that "it can enter into a surveillance-sharing agreement with a regulated, bitcoin-related market of significant size" but hasn't been able to prove that markets for bitcoin and its derivatives are such markets.
"The only thing missing is a safe method of doing so, which an SEC approved ETF would provide". The announcement of the rejection came after the U.S SEC reviewed the application for the second time, after an appeal from Tyler and Cameron Winklevoss - the co-founder of Gemini. Unlike the earlier ruling, which caused the price of Bitcoin to plummet, the decision appears to have had only a small effect on the market.
In a 92-page order Thursday, the Securities and Exchange Commission said the company behind the listing effort, Bats BZX Exchange, failed to prove that the bitcoin market would be sufficiently resistant to fraud and manipulation. The only commissioner who voted in favor of bitcoin ETF Winklevoss fund was Peirce.
Many have put down the recent rally of Bitcoin's price down to the fact that the SEC appeared to be lessing its pressure when it comes to issuing a Bitcoin ETF.
At the same time, it is noted that this decision can not be considered an assessment of cryptocurrencies and blockchain in general and applies exclusively to the structure of Winklevoss Bitcoin Trust.