Yesterday the Securities and Exchange Commission (SEC) denied the second attempt of the Gemini crypto exchange founders to launch an ETF. Cameron and Tyler Winklevoss are the Bitcoin whale billionaires behind Gemini. They made a valiant initial effort to establish the world’s first listed Exchange Traded Fund (ETF) back in 2017.
The proposed BATS BZX Exchange-listed Winklevoss Bitcoin Trust shares suffered by three-to-one from the SEC panel on Thursday. As expected on this news, BTC prices declined by 3% to reach $7,880 after the news, per Coinbase.
The SEC agency issued a press release Thursday. They claimed they disagree with the Winklevoss argument that Gemini Exchange and Bitcoin markets are “uniquely resistant to manipulation.” The SEC also raised issues of investor protection and fraud concerns as well.
The SEC Does Not Like Offshore Locations of Bitcoin and Ethereum
Crucially for Bitcoin and altcoins, the SEC reiterated that they did not disapprove the ETF because of investment/innovation issues. Instead they expressed concerns about the manipulation and fraud issues surrounding BTC. They were especially nervous that this market is both unregulated and primarily offshore.
The SEC pointed out that fully 95% of all trading volume for BTC takes place on non-American exchanges. Over 75% of all BTC volume originates internationally. Thee European Mediterranean island of Malta is now the new home of the world’s largest cryptocurrency exchange Binance.
In January, the SEC released a letter that raised a significant protection issue. This pointed out that there are “significant investor protection issues that need to be examined.” Until this is done, the SEC will hesitate to allow sponsors to sell such funds to non-accredited investors.
The SEC also showed concern about a widely varying bid and ask spread from one exchange to the next. They harbor great concern about Bitcoin futures markets’ volume. It is merely 2.5% of the silver market volume and 20% of the lower volume platinum market.
One other BTC ETF application still waits for approval or rejection by the SEC. This is the VanEck SolidX Bitcoin Trust. The SEC must make a decision on this proposed ETF by August 16th.
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