U.S. Securities and Exchange (SEC[1]) Commissioner Hester M. Peirce has published[2] a statement of official dissent from the agency’s second disapproval of the Winklevoss brothers’ application for a Bitcoin (BTC) exchange-traded fund (ETF) yesterday, July 26.
The Winklevoss’ Bats BZX Exchange, Inc. (BZX) had filed a proposed rule change with the SEC in June 2016 to allow it to list and trade shares of a Bitcoin ETF called the Winklevoss Bitcoin Trust, which was rejected[3] by the agency in March 2017. Following the disapproval of the initial proposition, the group filed a petition seeking “review of the disapproval by delegated authority, which the SEC formally rejected[4] Thursday, July 26.
Referring to the most recent rejection, SEC Commissioner Peirce argued that the SEC has fundamentally erred with its latest decision on three grounds. Firstly, Peirce contends that the agency overstepped “its limited role” when it focused on the characteristics of the underlying Bitcoin market, rather than the derivative the applicant sought to list:
“The Commission erroneously reads...the [Securities Exchange] Act, which requires…that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices…’ [It] focuses its decision not on the ETP shares to be listed ...but on the underlying bitcoin spot market….[instead of] the ability of BZX...to surveil trading of and to deter manipulation in the ETP shares listed and traded on BZX.”
She reinforces her point by adding that the “concerns underlying the [SEC] disapproval order go to the merits of bitcoin [itself] as an investment,” and that “if the disapproval order’s rigorous standard were applied consistently, many [other] commodity-based ETPs would be in peril, as rumors of manipulation plague
