In the late hours of Thursday, the U.S. Securities and Exchange Commission (SEC) rejected a long standing ETF application, filed by the Winklevoss twins, citing the fear of price manipulation and concerns about the lack of liquidity.

The Winklevoss twins’ proposal had stated that they would like to source the Bitcoin for the ETF from their own exchange, which seems to be the biggest reason for the rejection of their proposal because it raised concerns at the SEC about adequate liquidity.

The decision to reject their ETF application came with a 3-1 majority and was announced in a document that was about 90 pages long, explaining that the rejection of the ETF application was not because of any animosity that the body houses for Bitcoin, but because the proposal seemed unsafe.

This application was taken into reconsideration after the Winklevoss twins, along with a lot of public support and testimonies, requested the SEC to revisit their previously rejected ETF application.

Bitcoin Prices And Rejected Application

The last time the SEC rejected the Winklevoss ETF application, Bitcoin prices plummeted to the ground. But with Bitcoin on a rising trend and breaking through the $8,000 USD barrier this week, it hasn’t sustained a large hit, in comparison to the last time.

This time around, though the market value of Bitcoin did take a hit, it only dropped 3% and is expected to regain that in the early hours of Friday. The price of Bitcoin right now is dwindling right below $8,000 USD at $7,940.

The SEC’s Reasoning

The decision made by the SEC came with a 3-1 majority. And at a time when there are at least two more ETF licenses under consideration, that we know about. With the Winklevoss ETF rejected, the cryptocurrency community has no such particularly high hopes of things going differently for the VanEck and SolidX ETF application from Chicago Board of Options Exchange.

The reasoning that the SEC explained extensively in a 92-paged report boiled down to three reasons; loosely worded proposal, lack of liquidity and fear of price manipulation. In the report the SEC reiterated several times that the rejection of the application has nothing to do with their previous stands on Bitcoin and was purely a decision based on the proposal the Winklevoss twins submitted.

The SEC also pointed out that the exchange that the Winklevoss twins proposed to use to source their Bitcoin for the ETF, Gemini, has very little trading traction in the country. The SEC also, in their report, went on to say that;

“Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether Bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”

The Commissioner’s Dissent

The Commissioner of the SEC, Hester Peirce, has come out and expressed major dissent against the decision that the SEC came to with regard to the Winklevoss ETF. She said that the decision that the SEC has come to will adversely affect the innovation in the industry and circumvent the chances of growth of the cryptocurrency.

She expressed her dissent for the decision in a statement released and available on the SEC website and announced on Twitter;

Apparently, bitcoin is not ripe enough, respectable enough, or regulated enough to be worthy of our markets. I dissent: https://t.co/gH5zXaKtmj

— Hester Peirce (@HesterPeirce) July 26, 2018

Reactions; on Twitter and Reddit

As is the norm with breaking news of any sort, the rejection of the Winklevoss’ Bitcoin ETF application too had a lot of people taking to the internet to express their views and feelings about the entire situation.

A lot of people, online, have reiterated that there is a difference between the ETF applications that have been filed and that the shooting down of one proposal is not a precedent to make assumptions on the other ones.

Here are a few reactions;

Fuck the winklevoss twins and their ETF. It was rejected because they don’t know how to meet standards or they have incompetent lawyers or both.

THEIR ETF doesn’t matter

The ETFs the matter are ONLY VAN ECK.

I will explain why shortly after I do some research. Brb

— The Crypto Profit (@HonestlyCrypto) July 26, 2018

Remember when the SEC rejected the Winklevoss ETF last year? … Remember the price of #bitcoin at that time?

Hint: $900. 🍻

— A v B ⚡ (@ArminVanBitcoin) July 27, 2018

Rejected ETF gets re-rejected

Zzzzzz

— #33kByJuly3018Moku //not_giving_away_ETH\\ (@CarpeNoctom) July 26, 2018

Selling bitcoin because you expected Cboe ETF to be approved but Winklevoss ETF got rejected is like selling Twitter shares because Facebook plunged 22%.

Those two are not the same!

— Joseph Young (@iamjosephyoung) July 26, 2018

I think this is a good time to point out that no altcoin ETF has ever been rejected by the SEC

— Jeremy Ross (@jebus911) July 26, 2018

The Wait Begins

The Winklevoss ETF application is the first of a string of ETF applications that have been put up to the SEC for consideration. With some very promising players in the game for an ETF license, people are hopeful for more favorable decisions for the others.

The SEC re-rejected the Winklevoss proposal because of three reasons; lack of liquidity, loosely worded proposal and fear of price manipulation in the market. While the liquidity and manipulation issue can and most probably will be carried onto the consideration of the other ETF licenses, the cryptocurrency community is hoping that the proposal of VanEck and SolidX may just be able to tip the scores in their favor.

The VanEck and SolidX ETF proposal was opened for public comments earlier this month, giving hope that the final decision that will be made in their case, will go a different way.

Ramaa Mohan