Regardless of the U.S. Securities and Exchange Commission’s decision rendered on July 26, 2018, to reject the plans to create an exchange-traded fund that would invest in Bitcoin, the famed digital token seems to be experiencing a real rock-star comeback.
SEC Commissioners’ Differing Views
Less than a day after the SEC decision became public, one person from the Commission stirred the financial world by denouncing the decision and supporting cryptocurrency ETFs. Commissioner Hester Peirce told Bloomberg Radio that she doesn’t support the SEC decision to reject plans to list such a fund.
Consequently, the price of bitcoin, which went into a downward spiral shortly after the decision to deny the Winklevoss twins’ application for a bitcoin ETF, took an entirely different turn.
After dropping to as low as $7,793.02 on July 27, it jumped over $8,000 after Peirce explained her positive position toward a bitcoin ETF.
“As regulators, our rule is not to judge the value of what an investment is; it’s to give people the opportunity to make those judgments themselves. The fund would allow institutions to play a bigger role in the Bitcoin market, which I think would be good for the market and be good for retail investors as well.”
Unfortunately for the Winklevoss brothers, Peirce was the only Commissioner who voted in favor of their fund. The SEC Chairman Jay Clayton and two other commissioners all voted ‘no.’
Bitcoin’s Wild Ride
Bitcoin had gone through quite a wild ride of speculation before the decision, jumping over 30 percent since early July. The SEC decision, however, pushed the prices into the abyss, resulting in losses of $11 billion for the crypto market overnight.
For those of you who don’t remember, the SEC denied the BATS BZX Exchange’s request to list a cryptocurrency ETF run by Tyler and Cameron Winklevoss for the second time. In the meantime, at least four other companies are awaiting decisions of whether their bitcoin funds can list.
The Winklevoss twins filed the proposal for Winklevoss Bitcoin Trust in June 2018.
A sudden fall in the bitcoin price from $8,300 to $7,900 started a domino effect, leading other major cryptocurrencies and small market cap tokens to take heavy losses in both value and volume.
Barry Pershkow, a partner at Chapman & Cutler LLP, believes the SEC will probably deny other applicants on similar grounds or the exchanges will withdraw their applications themselves.
This is not the first time the Winklevoss brothers went through the disappointment of the SEC’s rejection. In 2017, the SEC refused to approve an application for the Winklevoss Bitcoin Trust as well.
They won’t give up, though. Shortly after Winklevoss brothers learned of the decision, they announced in a statement that they plan to continue working with the SEC, trying to win their approval of a bitcoin ETF.