Bitcoin just went from a high of 1327.1926 to 995.9575 in the blink of an eye.<p>Wow.<p>From the ruling....<p>> 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.<p>> Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated.
I'm not sure I entirely understand if they mean that Bitcoin itself must be regulated or just that the SEC needs to see that the major exchanges are regulated.<p>If its the former, then I think this is game over, if its the later then............hmmm I really don't know.<p>EDIT Having gone through the ruling it looks like they have a few reservations.<p>1) Most of the bitcoin trading happens on unregulated markets<p>2) Most of the volume happends in China and not the us and is therefore hard to regulate.<p>3) The ETF is tied to the Winklevoss own Gemini exchange which has little volume and often inferior pricing to other more liquid exchanges.<p>4) They bring up the lack of a liquid futures market, though I'm not sure this is really a concern.<p>> The Commission has, in past approvals of commodity-trust ETPs, emphasized the
importance of surveillance-sharing agreements between the national securities exchange listing
and trading the ETP, and significant markets relating to the underlying asset.
144 Such agreements,
which are a necessary tool to enable the ETP-listing exchange to detect and deter manipulative
conduct, enable the exchange to meet its obligation under Section 6(b)(5) of the Exchange Act to
have rules that are designed to prevent fraudulent and manipulative acts and practices and to
protect investors and the public interest<p>So until bitcoin markets are regulated by the SEC or similar no ETP/ETF products I suppose.<p>I'm a bit disappointed that there is no ETF but this is pretty darn reasonable.
Coin Center executive director Jerry Brito:<p>> The Winklevoss ETF proposal was rejected because the SEC found that the significant markets for Bitcoin tend to be unregulated overseas markets that are potentially subject to price manipulation. But this creates a chicken and egg problem. How do we develop well-capitalized and regulated markets in the U.S. and Europe if financial innovators aren’t allowed to bring products to market that grow domestic demand for digital currencies like Bitcoin?<p>Source: <a href="https://coincenter.org/link/coin-etf-statement" rel="nofollow">https://coincenter.org/link/coin-etf-statement</a>
This is a pretty big blow.<p>The ETF has been the talk of the town for the last four years, and it is not unreasonable to think that it has been holding the hand under the price, since to a lot of people it represented the coveted inflow of institutional investment into bitcoin.<p>With this gone, the immediate outlook for bitcoin is bleak. There is little market adoption to speak of, in fact bitcoin is probably losing market share, as the initial hype and attention grabbing announcements of bitcoin support have died down, and a lot of merchants have decided that the miniscule business it drives is not worth the trouble. Also, the network is straining even under the current load, leading to (much) longer transaction confirmation times and higher fees. The average fee for a bitcoin transaction is now almost one dollar - this rules out a lot of use cases that previously people would have said were ideal for bitcoin.<p>Which leads me to the even bigger problem: The bitcoin community and ecosystem is in a massive deadlock, between two sides that are equally rabid and antagonistic, and dividing the project down the middle, between the developers and the mining operators. Few outsiders likely know how bad it has become, but visit r/bitcoin and r/btc on reddit if you're curious. This would be concerning in itself for the future of the project, but it also means that right now <i>no major updates can be made to the bitcoin network</i>, because each camp runs a big percentage of the network and block any new initiative from the other side.<p>All of this makes me very bearish for bitcoin in the medium term. I am very sure that bitcoin has a future, but how long out that is, and how big it is, remains doubtful and could well be influenced negatively by particularly the issue of governance. Satoshi once said something like "in ten years bitcoin is either worth a huge amount or nothing". I'm starting to fear that might not be true - bitcoin could also become a small niche platform for a very limited set of use cases.
So what are the expected benefits of a bitcoin ETF? Many of the traditional benefits of ETFs are obsolete when you can just buy and hold an equivalent amount of bitcoin<p>The biggest benefit I can think of is that some institutional investors have restrictions on the types of securities that they can buy.<p>Someone could solve this by creating a company to buy lots of bitcoin, and then having an IPO to list that company on a public market. Then pension funds would be allowed to buy it, Jane Doe could buy some in her IRA, etc.<p>Any reason this wouldn't be just as good as an ETF?
So if you have a rare-earth metal commodity ETF that can be dug from the ground in conflict areas and have exchange markets in these wild areas, would the SEC deny that commodity ETF then because they wouldn't have surveillance-sharing agreements with those markets?
It's interesting, based on the rest of the ruling, that they're not <i>particularly</i> concerned with any other aspects of it as a commodity (they acknowledge various interesting properties of it but note that those wouldn't themselves prevent them from approving this), but instead solely concerned that the rest of the Bitcoin market isn't controlled and monitored well enough for them to regulate activities on it.
"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.<p>Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated."
Yet the price has only dropped around 80 dollars compared to yesterday. Not too bad. For a few minutes it dropped by around 250 dollars but it picked up quickly somehow.
This is a good thing for Bitcoin. The ETF rules in my opinion gave too much power to miners. The rules stated that the ETF would follow the chain with the most work after just 48 hours.<p>Miners need income, because mining is actively expensive. In the long term, this means they have to mine on the chain with the most valuable block reward. This means the economy really gets to decide the longest chain, not the miners.<p>But the ETF likely would have been large enough to tip the scales. Miners can stomach 48 hours of loss to push an agenda.<p>And it's probably not good to have such a huge portion of the economy in one place anyway. An ETF will make more sense when bitcoin has more maturity.
In summary: "<i>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."</i>
<a href="https://cryptowatch.de/kraken/btcusd" rel="nofollow">https://cryptowatch.de/kraken/btcusd</a> - chart<p>gravity is strong here
I very much agree with SEC's decesion, just for other reasons.<p>The usuall ETFs are baskets of bonds, stocks and commodities. Regardless of the level of volatility, they are all priced per the capacity of those stocks/bonds/commodities to create economical value. That means you have a solid economical logic to price them. Of course, supply and demand impacts the price, but even if no one wants to buy a certain stock, that stock has a marketable value. You can take the assets of that company, sell them and divine the cash by the number of stocks out there. Without going to too much details, I fail to understand how bitcoin can be treated like a stock/bond/commodities? Bitcoin value is purely based on the supply and demand forces. Without supply and demand, bitcoin has no value. On its own, it has no value generation power and therefore cannot be compared or traded like a stock, neither can be packaged into an ETF.<p>As much as I do not like to agree with SEC, this one is a right decesion!
> First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity.<p>> And second, those markets must be regulated.<p>So, essentially: bitcoin does not and can not satisfy these two conditions (nor can any other such scheme) and therefore you can't trade anything that is directly or indirectly representing bitcoins.
Something useful like bitcoin etf gets rejected. But look at some of the stocks that are allowed to trade...
Magnegas for example has been an ongoing fraud for 17 years.
Fake delivery of machines to Kazahkstan. It would be easy to prove this a fraud but the SEC does not care.
This seems to be a victory for bitcoin. Why would a government entity know what to do with a purposely designed non governmental decentralized currency? Especially a profit seeing ETP loaded on top with 0.xx% commission? It's ludicrous to imagine the SEC jumping on this train, BTC will outlive them. As for the Wrinkles twins, they are profit seekers, nothing more. The purpose of a decentralized currency is to be a decentralized currency, enabling peer to peer outside of sovereign intervention economics. This is a non sovereign movement regulated by supply, demand, peers sprinkled with occasional robbery here and there. This digital currency which will outlive many sovereign states that currently exist.
The volatility of bitcoin to regulatory announcements is basically sky-high, and I imagine a money making opportunity.<p>Checked Coinbase right about 30 minutes after it cratered down to 995. Text price alerts don't seem to be working :/
Can't they just file in another country? I mean, it doesn't really matter where it's traded; any decent bank will give you access to at least the LSE and Xetra in addition to the two big American exchanges.
There is another proposed ETF being ruled on in a couple weeks:<p>>"The Commission, pursuant to Section 19(b)(2) of the Act,9 designates March 30, 2017 as the date by which the Commission should either approve or disapprove the proposed rule change."<p><a href="https://news.bitcoin.com/sec-delays-decision-solidx-bitcoin-trust/" rel="nofollow">https://news.bitcoin.com/sec-delays-decision-solidx-bitcoin-...</a>
Can someone please explain to me the logic in treating Bitcoin as an investment vehicle? I get that fiat currencies are traded like equity, but this is not that. I also understand that there is a huge potential for short term gains, but the risk is just as great for a total loss.<p>Bitcoin is a means of transferring wealth. It is a tool, not a commodity. When are people going to stop this speculation and treat it as such?
The Bitcoin markets don't have to be regulated for this ETF to be tradable. The Winklevoss could still list their ETF on the OTC Markets and anyone with a brokerage account would still be able to trade it. There's already a Bitcoin Investment trust that is currently tradable on the OTC market though as one commenter mentioned it's currently trading at a premium.
Could someone explain what a Bitcoin ETF is? My understanding is that ETFs are like index funds, which group other stocks into one basket. There's only one Bitcoin though, so what would a Bitcoin ETF collate? The "Description of the Proposal" didn't really make that clear to me.
Here's the basic thing: Bitcoin is fatally flawed. Is it meant to be a payment method (in which case an ETF or otherwise treating it as an investment vehicle is roughly as nonsensical as having an ETF that deals with blank checks) or is it an investment (and if it's an investment, what on earth are people investing in?). The volatility of Bitcoin plus the constrained supply leading towards upwards pressure on the price of bitcoins mean that it's a deflationary currency and deflation is a bad thing as it creates an incentive to not spend. This means that the only real reason to spend Bitcoin or otherwise use it as a payment is for situations where that's the only option and right now, and for the foreseeable future, that means assorted illegal or at best borderline illegal products, which gives it a halo if unrespectability that the Winkelvoss twins are not going to erase. Perhaps a blockchain-based cryptocurrency might in the future resolve these issues, but otherwise it's a doomed product that I wouldn't put a single penny (or watt of household electricity) into.
As usual in the bitcoin universe we are going to get a lot of people trying to explain you why something they were saying it would be so great for bitcoin until 1h ago, is actually a very bad thing for bitcoin and that this was actually the best possible scenario.
I wonder what assets are resistant to mass systemic failures arising due to calamities such as war etc.
Bitcoin: without the internet, it would be hard to transact
Fine Art and Gold: hard to carry around
Dollars, land, guns, alcohol?
That's a bummer I always hoped I could invest into an Exchange Traded version of exposure to Bitcoin<p>ha ha ha, now china gets all the exchange data, morons
i don't know why people get surprised it was obvious from the begining sec won't approve the request i am afraid it was just a trader manipulatioin
This is the same committee that approved VXX and UVXX ,which have lost 99.999% of their value<p>There is an OTC fund that holds Bitcoin...but at a large premium to NAV
Unrealistic security should be the only reason to disapprove of a bitcoin ETF governed by the SEC. Not only is it poorly suited for reckless centralization by thousands of indirect investors, but bitcoin as a whole would be setup up for massive government retaliation once the keys are compromised. MtGox x 10,000.
Having sold all of my bitcoin at ~800 at a small loss (a significant portion coming from commission fee( ~$150+ to convert low four digit USD amount of bitcoins to fiat.) I am paying attention to the bitcoin prices closely. As USD gains more interest it's going to put downward pressure on gold and bitcoin.<p>There's no way this is going to gain mass adoption by being this expensive.<p>More importantly, this signals strong government regulation in the bitcoin and cryptocoin industry in general. I wouldn't be surprised if we started seeing security laws being applied retroactively to all the scams like initial coin offering (like IPO but unregulated and heavily manipulated) on Bitcoin and Ethereum.<p>To the wary trend watcher, this is exactly what VC's feared and noted by the significant decline in VC investment in blockchain and cryptocurrency startups.