The dream of a Bitcoin exchange traded fund to revitalise calls for official recognition of cryptocurrencies has stalled again.
The infamous Winklevoss twins, who are cryptocurrency pioneers, had lobbied US regulator the Securities & Exchange Commission (SEC) for the Chicago exchange Cboe Global Markets to list and trade shares in their cryptocurrency fund.
But the SEC argued that no convincing arguments were made in favour of listing the Winklevoss Bitcoin Trust and refuted the claim Bitcoin markets were not open to manipulation.
“The arguments submitted in support of this claim are incomplete and inconsistent, and are unsupported or contradicted by data,” said the SEC’s 92-page order.
The decision was agreed by three commissioners, with one dissenting voice.
Market manipulation fears
Cboe is reviewing the decision to consider launching an appeal in a federal court.
The company’s president Chris Concannon said: “We take concerns about the security and stability of markets and products very seriously.
“Given US investors are clearly already accessing these unregistered financial products, we also believe that investors are better served by products traded on a regulated securities market and protected by robust securities laws.”
The SEC has commented that the ruling does not mean cryptocurrency or blockchain technology has a ‘utility or value as an innovation or investment’.
But the ruling did reflect the number of hacks suffered by cryptocurrency exchanges and the suggestion last year’s phenomenal price hikes were forced by market manipulation.
Five-year fight for acceptance
“The public blockchain ledger, even in combination with the other monitoring abilities Cboe identifies, does not provide comprehensive customer trading or identity information,” said the SEC, voicing doubts that Cboe could avoid attempts at manipulation or fraud in the market.
The Winklevoss exchange traded product is not the first – one is already trading in Sweden, while at least three others are in the SEC pipeline in the US.
The twins have tried to push their fund over the line with the SEC since 2013. Their proposal was first rejected in 2017 because the SEC feared manipulation of an unregulated market.
The value of Bitcoin and other cryptocurrencies dropped significantly on the news. Bitcoin was trading at $8,286 prior to the ruling and has fallen to $7,593.