
SEC Shoots Down Winklevoss Bitcoin ETF Bid - chollida1
http://www.coindesk.com/sec-shoots-winklevoss-bitcoin-etf-bid/
======
chollida1
Bitcoin just went from a high of 1327.1926 to 995.9575 in the blink of an eye.

Wow.

Here is the actual SEC ruling.

[https://www.sec.gov/rules/sro/batsbzx/2017/34-80206.pdf](https://www.sec.gov/rules/sro/batsbzx/2017/34-80206.pdf)

From the ruling....

> 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. > 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.

If its the former, then I think this is game over, if its the later
then............hmmm I really don't know.

Can someone more knowledgeable inform me here?

 __EDIT __Having gone through the ruling it looks like they have a few
reservations.

1) Most of the bitcoin trading happens on unregulated markets

2) Most of the volume happends in China and not the us and is therefore hard
to regulate.

3) The ETF is tied to the Winklevoss own Gemini exchange which has little
volume and often inferior pricing to other more liquid exchanges.

4) They bring up the lack of a liquid futures market, though I'm not sure this
is really a concern.

 __EDIT2 __

Rats, I 've somehow confused myself into duplicating this comment across two
threads:(

~~~
JumpCrisscross
I looked at launching a Bitcoin ETN a few years ago. The problem is, for any
exchange-traded product to work, you need a clear index it's designed to
track. For stocks, those data are reliably available in exchanges' data feeds.
For commodities and FX it's a bit trickier, since people can trade these
without reporting their trades, but the presence of healthy spot and futures
markets is a reliable enough reference to prevent most shenanigans.

With Bitcoin, there is no trusted price. Each exchange reports its own price
according to its own process and methodology. Not only could those be
manipulated, but the price between them diverges from time to time. This
raises a problem for an ETP manager. When redeeming units, which price should
be used? How do we trust those prices aren't being manipulated?

Ultimately, I found these issues impossible to resolve. This decision by the
SEC seems like the right one.

------
greenyoda
Main discussion here:
[https://news.ycombinator.com/item?id=13842130](https://news.ycombinator.com/item?id=13842130)

