Bitcoin fell after the U.S. Securities and Exchange Commission rejected a request to list an exchange-traded fund run by Tyler and Cameron Winklevoss, showing the regulator remains skeptical that the market for the cryptocurrency is sufficiently free of abuse to bring trading to the masses.

The SEC said Thursday it isn’t convinced that trading of the world’s largest virtual token has adequate surveillance and that Cboe Global Markets Inc., which would have listed the bitcoin ETF, failed to show that the underlying market was "resistant to manipulation." The ETF’s value would have been tied to trading on the Winklevoss twins’ Gemini exchange.

In rejecting the Cboe’s proposal for a second time in 18 months, the SEC raised concerns about the reliability of trading and volume data for bitcoin, according to a filing posted on the regulator’s website. The agency’s staff specifically called into question the ability of bitcoin exchanges to sufficiently police trading.

Bitcoin had been rising recently in part on speculation that the SEC would sign off on an ETF. The regulator’s decision is a major setback for bitcoin enthusiasts, because an ETF would have opened up the market to mutual funds and other institutional investors that are restricted from trading the token.

Bitcoin fell by as much as 3.6 percent after the SEC’s announcement to $7,848.46. That’s almost 60 percent below the high of $19,511 reached in December.

"The record before the commission indicates that a substantial majority of bitcoin trading occurs on unregulated venues overseas that are relatively new and that, generally, appear to trade only digital assets," the SEC said in its filing. "Regulated bitcoin-related markets are in the early stages of their development."

Cboe President and Chief Operating Officer Chris Concannon said the exchange took market stability and security "very seriously."

"Given U.S. investors are clearly already accessing these unregistered financial products, we also believe that investors are better served by products traded on a regulated securities market and protected by robust securities laws," he said in a statement. Cboe would continue to work with the SEC on winning approval for a crypto ETF, Concannon added.

“Despite today’s ruling, we look forward to continuing to work with the SEC and remain deeply committed to bringing a regulated bitcoin ETF to market and building the future of money,” Cameron Winklevoss said in a statement.

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