Learning From Wounds: What Lies Ahead For Other ETFs
Following the rejection of the Winklevoss Bitcoin ETF, it is not clear what the fate of the others filing for approval.
Considering the decision made on the Winklevoss Bitcoin ETF by the Securities and Exchange Commission on Friday, March 10, it is not likely that the other two Bitcoin ETF applications would be approved.
While it would be expected that the others pending a decision will study what went wrong the twins’ filing and improve on what could be considered their wrong moves, it would seem such a move would be futile as the chance of their ETF applications’ failure would be for the same reasons.
SEC wants regulation
The issue of regulation, which SEC cites for its objection, cannot be solved by the applicants themselves.
"As discussed further below, the Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest. The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated."
Simply put, the reason for the rejection was that the majority of the exchanges are unregulated which, as it is today, seems to be beyond what one or both companies seeking an approval can fix on their own within the shortest time.
The future is optimistic
According to the CEO of CryptoCompare, which brings the latest streaming pricing data of cryptocurrencies, Charles Hayter, the failure to get the ETF approved means back to the drawing board this time for the Winklevoss twins as they take advice and smart from their wounds.
He adds in an email:
“It is expected that they won't give up and usual information will be disseminated as to the reason for the refusal. This will allow for a second run at the goal. Besides that, there are other jurisdictional options that will offer alternative listing options.”
The failure also points to the need for the ecosystem to the entire exchanges ecosystem to work towards putting mechanisms in place to meet SEC’s requirements. With the Bitcoin community growing larger by the day, the future is optimistic for an ETF.