The Securities and Exchange Commission has rejected a second application for a bitcoin exchange-traded fund in another blow to attempts to provide public investment vehicles for the cryptocurrency.

In a ruling made Tuesday, the commission cited similar reasons to that given for its rejection of the Winklevoss Bitcoin Trust ETF earlier this month. It said the proposed product was not consistent with the requirement 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 SEC further noted that the ETF application failed to satisfy two requirements, first that the product would have surveillance-sharing agreements with “significant markets for trading the underlying commodity or derivatives on that commodity” and second that the markets for trading the commodity in question must be regulated.

“Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated,” the finding notes, meaning that the application was not “consistent with the Exchange Act.”

SolidX, the company behind this ETF application, filed its paperwork for an initial public offering for its SolidX Bitcoin Trust in July with a product that sought to provide shareholders with exposure to the daily change in the U.S. dollar price of bitcoin.

A third application for a bitcoin ETF from Grayscale Investments that would be available to institutional and retail investors applied for in January remains outstanding. The SEC gave no indication as to when it may rule on that application.

Although the precedent set by the rejections of both the Winklevoss and SolidX applications sets a standard that doesn’t look good for the Grayscale application, there are some differences. In particular, the Grayscale Bitcoin Investment Trust has previously been traded on the Over The Counter boards and has substantial existing holdings, meaning it’s not impossible that the application may be third time lucky.

The price of bitcoin was not particularly affected by the failure of the SolidX application because the market expected a rejection. Bitcoin dipped slightly in trading to be sitting at $1,011.97 as of about midnight Eastern Time, maintaining the over $1,000 price point it dipped below briefly last week.

Photo: Kevin Hutchinson/ Wikimedia Commons