SEC Again Rejects Winklevoss Proposal for Bitcoin Exchange-Traded Product

August 07, 2018

The U.S. Securities and Exchange Commission on July 26, 2018 formally disapproved the proposed rule change by Bats BZX Exchange, Inc. (BZX) seeking to list and trade shares of the Winklevoss Bitcoin Trust (Trust). In disapproving the proposed rule change, the SEC voted three-to-one against the proposal, with Commissioner Hester M. Peirce dissenting. The Commission found that BZX’s proposal failed to satisfy the requirements of Section 6(b)(5) of the Securities Exchange Act of 1934, 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.” Notwithstanding its disapproval, the Commission signaled that it was open to the possibility of approving similar products in the future as the markets for bitcoin “continue to grow and develop.” This was the second time BZX’s proposed rule change has been rejected.

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