In another blow to bitcoin legitimacy, the U.S. Securities and Exchange Commission (SEC) has denied the second bitcoin-based ETF bid up for consideration this month — the Intercontinental Exchange, Inc.’s NYSE Arca exchange’s request to list and trade the SolidX Bitcoin Trust.
Once again, the lack of oversight, regulation and the potential for fraud in the broader bitcoin space worked against the proposed ETF.
In its latest ruling, the SEC mirrored the language used in their previous denial, once again referring to Section 6(b)(5) of the Exchange Act, which “requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”
As with last time, bitcoin’s value fell upon the news — though not nearly as dramatically as after the previous SEC ruling. At the time of writing, bitcoin was worth $1,037.17, down from a day high in the 1060s just before the news broke.
While the news isn’t exactly unexpected, the SEC’s calls for regulation and oversight are additionally sobering given other developments brewing in the bitcoin ecosystem.
Concern among investors has grown amid signs of an impending hard fork. While the debate stems from differing ideologies on block size, the controversy calls into question the ability of a digital currency without a central authority to update and innovate itself in any meaningful way.
If competing factions can’t come to an agreement on block size, how will the broader ecosystem be able to put systems into place to meet the SEC’s requirements, or, for that matter, make any major changes?
Meanwhile, the SEC still sits on one remaining bitcoin ETF proposal — Grayscale Investments LLC’s Bitcoin Investment Trust, which filed with the SEC to have its trust listed on the NYSE back in January, seeking to launch with some $500 million. Given the outcomes for the prior two, things look grim for the viability of the Bitcoin Investment Trust.