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Published: Mon, March 13, 2017
Economy | By Melissa Porter

Denied: Here is the SEC Order Denying the Winkelvoss Bitcoin Trust

Denied: Here is the SEC Order Denying the Winkelvoss Bitcoin Trust

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The commission said bitcoin exchanges are not regulated and are susceptible to "fraudulent or manipulative acts and practices".

The value of a single bitcoin fell 7.6 per cent to $1,101 on Friday following news of the SEC's rejection.

It should be noted that on 3 March, prices of bitcoin hit $1300 levels - more than the price of gold - in anticipation of an approval for ETF from the SEC.

Soon after the ruling, prices of bitcoin crashed. That expected rise was likely priced into Bitcoin's price ahead of the SEC ruling, which would explain why a negative ruling led to a plunging value for the cryptocurrency. "The fact that they're not getting this approval is a big blow for this particular product". Because of the way they're created, bitcoins are available on a limited basis, which, based on increased demand, would help increase the price.

In the same vein, supporters insist the money is also "inflation proof": with a set number of bitcoins in the market, their value won't decrease due to an increasing supply.

Weisenthal noted that GLD, the first gold ETF, faced struggles. It further adds that the said nature makes the digital currency made it too hard to monitor, thus, making it highly susceptible to fraudulent activity.

Representatives of the SolidX Bitcoin Trust, which filed in July to list shares on the NYSE, could not be reached for comment.

"The reasons for disapproval appear unrelated to specifics of the Winklevoss filing and therefore this announcement is a negative indicator for the prospects of the other bitcoin ETFs", he said.

A bitcoin ETF would allow people to invest in the digital currency in the same way that they can buy funds that track tangible currencies such as the dollar, the yen or the euro, says Todd Rosenbluth, director of ETF and mutual fund research at CFRA. "We always viewed the potential for the ETF as a low-probability event that would only accelerate and de-risk the trajectory that bitcoin has already been on over the past 8 years".

"How do we develop well-capitalised and regulated markets in the USA and Europe if financial innovators aren't allowed to bring products to market that grow domestic demand for digital currencies like Bitcoin?" asked Jerry Brito, executive director of Coin Centre, an advocacy group. The bitcoin price would have continued to fluctuate after the ETF priced its bitcoin for the weekend.

In response to the decision, the bitcoin price of bitcoin plunged, dropping 18 percent in trading.

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