Last year, the SEC rejected an application by Cameron and Tyler Winklevoss for what would have been the first-ever Bitcoin ETF.  The group made some changes and resubmitted their application in June.  In a release yesterday, the SEC rejected the revised request as well.

The exchange that sought to list the Winklevoss’s ETF had argued that Bitcoin trading is too decentralized across the globe for fraudsters to manipulate the price.  The SEC found that the record did not support that conclusion.  The Commission also noted that “recent academic papers suggest that the price of bitcoin can be, and has been, manipulated through activity on bitcoin trading venues.”

Republican Commissioner Hester Peirce  dissented and said that the statutory standard had been met and that the SCE should therefore permit Petitioner to list and trade its Bitcoin-based exchange-traded product.  She wrote:

“More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order. More generally, the Commission’s interpretation and application of the statutory standard sends a strong signal that innovation is unwelcome in our markets, a signal that may have effects far beyond the fate of bitcoin ETPs.”

There was also a ray of hope.  The SEC included the following qualifier:

“[D]isapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”

This comment might hold out hope for others that the SEC may be receptive to a future Bitcoin ETF if the right conditions are met and its host exchange can provide proof of sufficient market protections.  Indeed, applications from other funds are still pending.  VanEck and SolidX filed a request for an ETF based on Bitcoin futures.  The SEC recently delayed decision on NYSE Arca’s request  for five Bitcoin-related ETFs.  And, earlier this week, asset manager Bitwise asked for permission to list an ETF tied to ten cryptocurrencies.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. He is currently the Chairman of the Litigation Department of the firm’s New York office. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. Since 2008, David has been included in Chambers for his expertise in international arbitration.