The second week of March witnessed heavy drama in terms of Bitcoin price, swaying fundamentals thanks to the pending approval of Winklevoss ETF. The SEC set the date of verdict on 10th March, before Bitcoin prices rallied anticipating the ETF approval. Nevertheless, Securities and Exchanges Commission decided to reject the proposal, causing a drop in prices and heavy market volatility. Last week of March has seen another Bitcoin ETF proposal being rejected but the markets remained unscathed due to this decision. SolidX was planning to launch their Bitcoin ETF(Electronic Traded Fund) on the New York Stock Exchange. Let’s look into the reasons SEC gave for the rejection of the proposed ETF:
Reasons for Rejection
With SEC ruling out the Winklevoss ETF, speculators were sure that since Bitcoin is relatively new and not well regulated, SEC would cite the same reason for rejecting SolidX’s ETF listing. This turned out to be true and as in the case of Winklevoss ETF, SEC listed the following reasons for rejecting Solidx’s claim:
“The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.”
What this means to Bitcoin
The main reason why SEC cited for the rejection was that Bitcoin markets are unregulated. With Bitcoin transfers being instant and decentralized, monitoring and regulating the Bitcoin markets is a herculean task. Very recently Node40 has launched software to monitor Bitcoin transactions and calculate the taxes for Bitcoin gains and losses. With good time, we can surely expect methods to regulate Bitcoin markets to effectively come up with a regulatory framework that is easy to operate. An ETF would surely take Bitcoin towards mainstream adoption on par with different investable asset classes. But by the SEC’s standards Bitcoin is not ready for an ETF yet as it would require a well-regulated ecosystem.
Price goes unaffected
After the much hyped Winklevoss ETF decision affected the Bitcoin markets, with a lot of wagering over the Bitcoin prices, people have chosen to ignore the effects of SolidX EFT decision. The Bitcoin market prices were steady and went up by $35 after the decision was made public. This shows the growing immunity Bitcoin has been amassing to mainstream cryptocurrency fundamentals. Such character has been displayed even while Chinese Exchanges decided to ban withdrawals which had a very acceptable impact on prices.