Bitcoin fell sharply on Wednesday after the U.S. Securities and Exchange Commission (SEC) delayed a decision on a proposed bitcoin exchange-traded fund (ETF), which would have been the first financial product of its kind. The SEC received more than 1,300 comments on the proposed rule change as of 6 August, it said.
So why was Cboe BZX's Bitcoin ETF rejected while the VanEck-SolidX proposal is still being considered? The VanEck ETF is fully secured, takes over safe storage for investors and does not rely on just one crypto-exchange for valuation, which ultimately led to the rejection of the Winklevoss Bitcoin ETF, says Canaccord. "Accordingly, the Commission... designates September 30, 2018, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change". What's particularly unique about this situation is that the VanEck ETF would have been backed not by futures, but by actual bitcoins.
CNBC expert Bob Pisani said he spoke with both the Securities and Exchanges Commission Chairman Jay Clayton and the SEC's Bitcoin Affairs Officer. Therefore, if the SEC accepts a Bitcoin ETF, it would be a positive step forward for the cryptocurrency industry which could even potentially pave the way for the mass adoption of cryptocurrencies.
Over the course of the past few months, Bitcoin has seen an astounding recovery, moving from a yearly low at $5,800 to briefly reaching a two-month high of $8,500. This application was ungraciously rejected, but many believed it was because the organization was too busy concentrating on the VanEck entity, which up to that point, appeared to be in good standing with the SEC and likely to garner the approval it needed to move ahead.
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Potential manipulative activity would be identified immediately, providing the "necessary deterrent to manipulation" described in the March 2017 disapproval notice.The decrease in market cap came as the SEC opted to delay their decision, with a 4% drop within 24 hours to a trade price of $6,500.
Yesterday, Bitcoin was comfortably hovering around the $7,000.00 region, a region that seems to suggest investors were playing it cool, in anticipation for something big that could have accelerated the markets.
"I think that something that goes up to $20,000 in one year can have a correction down to around $6,000..." He added that investors should prepare to wait for a long time before seeing similar products trading in the regulated exchange. Check our tools section.