Investors eager to see an exchange-traded product focused on Bitcoin or other digital currencies will continue to be disappointed, as the U.S. Securities and Exchange Commission today denied a proposal that would have allowed the SolidX Bitcoin Trust to be listed on the New York Stock Exchange. The decision represents the second such denial in the last several weeks, as the Winklevoss ETF proposal received a similar rejection earlier this month.
In its decision, the SEC noted that:
“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.”
The Commission also noted that the broader market for Bitcoin remains largely unregulated – something that it cited as a major reason for its rejection of the Winklevoss proposal nearly three weeks ago.
That rejection was followed by a temporary decline in the digital currency’s price, as many investors had believed that the SEC would accept the Winklevoss ETF. This latest rejection may not have the same kind of impact on Bitcoin's price, given that most people were probably expecting today’s outcome.