Announced in a filing just minutes ago, the U.S. Securities and Exchange Commission (SEC) has denied the latest Bitcoin exchange-traded fund (ETF) hopeful, Bitwise Asset Management. The proposal, filed by the cryptocurrency investment services firm in collaboration with NYSE Arca, purportedly “has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices.'”
This echoes SEC Chairman Jay Clayton’s recently-cited concerns about the Bitcoin market. Clayton said earlier this month that Bitcoin “trades on largely unregulated markets” and Bitcoin custodial offerings might not be ready for institutional use.
Indeed, in late September, Bitcoin’s price tumbled off a cliff, as it shed 20% of its value in three days’ time. Although this wasn’t abnormal for the cryptocurrency market per se, Jake Chervinsky argued that the drop is a clear sign that the SEC isn’t wrong in remaining skeptical of Bitcoin. Chervinsky, the general counsel for Ethereum DeFi application Compound, issued the below tweet to convey this point.
– bitcoin drops 20% over a few days – there's no simple explanation for why – the drop made big money for offshore unregulated margin trading platforms – trading on those same platforms might've caused the drop in the first place – you're still wondering why the SEC has concerns?