Investors betting SEC will approve U.S. first ETF for bitcoin

Bitcoin price surpasses gold for the first time in history

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The Securities and Exchange Commission Friday rejected a proposal for the first exchange-traded fund that would track the price of the digital currency known as bitcoin.

Citing the possibility of fraud, the agency turned down a proposal to alter stock exchange rules to allow the creation of an exchange traded fund (ETF) for bitcoin.

The decision immediately sent the price of the crypto-currency down 14 percent, to about $1,022.68 after the decision, which came shortly after the market closed.

Many traders saw the US$1,200 mark as a point of resistance, although that seems to have been broken with relative ease.

Bitcoin had scaled to a record of almost US$1300 this month, higher than the price of an ounce of gold, as investors speculated that an ETF holding the digital currency could woo more people into buying the asset.

"It's a very unilaterally controlled process there", Josiah Hernandez, chief strategy officer at Bitcoin ATM company Coinsource, told The Post.

"There are other endeavors out there trying to get bitcoin ETFs to market", said Bloomberg's Joe Weisenthal. It further adds that the said nature makes the digital currency made it too hard to monitor, thus, making it highly susceptible to fraudulent activity. On the other hand, language in the decision suggests the SEC remains deeply skeptical of bitcoin. There's only a small constituency of individuals that even understand what bitcoin is, let alone how to trade it and transact it.

"We began this journey nearly four years ago, and are determined to see it through", he added, referring to the brothers' first ill-fated attempt at trading the currency via the Winklevoss Bitcoin Trust. This is because it seems that the regulators didn't take issue with the Winklevoss application, they were just concerned with the lack of regulation surrounding bitcoin in general. The price has already been in flux as of late, due in part to China's recent crackdown on Bitcoin trading.

While there are two more bitcoin ETF applications still in a review period, the outlook isn't good. From levels of $1279.8 dollar per bitcoin it declined by 17% to $1063.3 in a span of 11 minutes on BitFinex, the largest bitcoin exchange in the world. "We agree with the SEC that regulation and oversight are important to the health of any marketplace and the safety of all investors", Tyler Winklevoss said in a statement.

Both brothers have bet big on bitcoin. The proposal would use Winklevoss backed businesses to store the bitcoins that would back the shares.

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