In early March, the Securities and Exchange Commission (SEC) denied the application of a Bitcoin ETF developed by the Winklevoss brothers, called COIN. The ruling sent a scare through bitcoin markets. Today, a second Bitcoin ETF, created by FinTech firm SolidX, faced the judgment of the SEC. SolidX applied to have its bitcoin ETF listed on the New York Stock Exchange. The Commission voted to deny the proposed ETF and cited many of the same arguments used in the denial of the Winklevoss ETF.
There was little hope for a SolidX victory this time around and it seems like it will take considerable time before a bitcoin-related security can make its way into U.S. markets. The condition of the bitcoin market has not improved since the denial of COIN, and in some ways, it has worsened. Growing disputes and concerns over a hard fork, or split, of the digital currency, has created an unstable and murky outlook for bitcoin. This uncertainty is exactly what the SEC has said it is trying to avoid, and it also cited issues of liquidity and lack of regulation in bitcoin markets.
The decision will most likely not have a significant impact on bitcoin prices relative to what we saw earlier in the month. Bitcoin traders, enthusiasts, and owners have much more serious issues on their minds, like the prospect of a digital currency split and the likely price plunge that will follow.
SolidX was not the first proposed Bitcoin ETF and it won’t be the last either. A similar ETF has been proposed by Grayscale Partners and is awaiting a SEC decision. Bitcoin investors will have to wait and see if Grayscale Partners can inspire SEC confidence in bitcoin. One cannot say for sure what the SEC will do, but the odds are stacked against Grayscale and market-based bitcoin trading in general.
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