Here we go again
The Securities and Exchange Commission (SEC) has denied a bid to list a bitcoin exchange-traded product (ETP) on the New York Stock Exchange (NYSE).
This is the SEC’s second denial in a month to allow trading in a bitcoin-tied ETP.
Don’t touch it with a ten foot pole
In a Tuesday filing, the SEC announced rejecting the proposal to list and trade SolidX Bitcoin Trust by Intercontinental Exchange INC’s Arca exchange.
On March 10, the SEC also snubbed the application of listing bitcoin ETP on the Bats BZX Exchange by investors Cameron and Tyler Winklevoss.
Soon after, Bats challenged the SEC decision, and an outcome is pending.
It is clear from these two decisions that the SEC is skeptical of bringing to market a first-of-its-kind product that tracks the virtual-currency.
A currency that is not a currency that is a currency
Bitcoin is a pseudo-currency that operates virtually. Anonymity is easy, as the currency has managed to bypass any central authority or regulations by national banks and governments thus far.
This very fact, which is attractive to many its users, is what makes SEC skeptical.
“The Commission believes that the significant markets are unregulated,” said the filing. To overcome those issues, the Commission pointed out, the virtual coin products must have “surveillance-sharing agreements” with the market and “those markets must be regulated”.
This poses significant challenges
Businesses operating with bitcoins can be regulated with relative ease.
But the coin’s peer-to-peer protocol makes the flow of finance impossible to trace.
ETF providers therefore can never sign on to surveillance sharing agreements.
The value
We recently reported how Bitcoin has become more valuable than gold, trading as high as $1300 earlier this month.
However, the denial of the Winklevoss ETP led to a plunge in the currency’s price to $1,041.
This latest denial of SolidX Bitcoin Trust might erode its value more.
Notes J.P Buntinx of Bitcoin Service News, the “price has seen extended volatility over the past few weeks. Volatility is not a positive trait when it comes to launching an ETF of such magnitude”.
More coin exchange proposals
The SEC is currently also reviewing a third Bitcoin ETP, the Bitcoin Investment Trust, proposal made by Grayscale Investments LLC.
If the first two decisions are any indication, the prospects for Grayscale are not rosy at all.
Perhaps on the blue moon
One of the crypto-currency’s biggest challenges has been the inconsistent treatment of its asset-holders in the hands of governments around the world.
[clickToTweet tweet=”Bitcoin’s limited adoption and resistance make it a risky asset for many investors.” quote=”Bitcoin’s limited adoption and resistance from central banks from America to China still makes it a risky asset for many investors.”]
One thing is for certain. Bitcoin ETPs won’t be introduced in US markets anytime soon.
