The price of bitcoin recovered over the weekend after the shock rejection by the Securities and Exchange Commission of the application from the Winklevoss twins to list their Bitcoin Trust Exchange-Traded Fund.
The famous twins filed the proposed ETF back in 2015 as a way for those interested in investing in bitcoin to do so without investing in the cryptocurrency directly. But the SEC was having none of it based on the fact that bitcoin is unregulated.
“First, the exchange must have surveillance sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity,” the SEC said in a statement. “And second, those markets must be regulated. Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated.”
“The Commission notes that bitcoin is still in the relatively early stages of its development and that, over time, regulated bitcoin-related markets of significant size may develop.”
Coin Center Executive Director Jerry Brito explained the decision and the problems it causes in a statement sent to SiliconANGLE:
“The Winklevoss ETF proposal was rejected because the SEC found that the significant markets for Bitcoin tend to be unregulated overseas markets that are potentially subject to price manipulation. But this creates a chicken and egg problem. How do we develop well-capitalized and regulated markets in the U.S. and Europe if financial innovators aren’t allowed to bring products to market that grow domestic demand for digital currencies like Bitcoin?”
Following the news delivered on Friday, the price of bitcoin plunged rapidly from $1,287.74 to a low of $1,085.33. But despite media doom and gloom including headlines such as “The SEC has just handed bitcoin a huge setback,” the initial shock from the decision quickly wore off. The price recovered in weekend trading to $1,227.18 as of 9 p.m. Eastern Sunday. That’s slightly lower than its peak price but historically a strong price and an apparent resumption of a four-month upward growth trend.