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SEC Commissioner Officially Dissents From New Bitcoin ETF Decision, Becoming Popular on The Crypto Community

Following the SEC’s decision to reject the application for approval of the Winklevoss Bitcoin Trust for listing and trading shares on Bats BZX Exchange, Inc. (BZX), the SEC Commissioner Hester Peirce issued an official Dissent in which she states her opinion regarding what she considers an incorrect decision:

“I respectfully dissent from the Commission’s order disapproving a proposed rule change, as amended, to list and trade shares of the Winklevoss Bitcoin Trust on Bats BZX Exchange, Inc. (“BZX”).”

Ms. Peirce’s voice reflected the sentiment of several members within the crypto community who consider that government controls pose a barrier to the potential benefits that cryptos and blockchain technologies could bring to the world:

“I reject the role of gatekeeper of innovation—a role very different from (and, indeed, inconsistent with) our mission of protecting investors, fostering capital formation, and facilitating fair, orderly, and efficient markets. Accordingly, I dissent.”

This would be the second time the Winklevoss twins fail in their attempt to obtain approval from government agencies. The first time was in 2017.

If approved, it would be the first cryptocurrency ETF and would have allowed trading mutual funds and institutional investments with cryptocurrencies.

The SEC released a filing on its decision, stating that the arguments put forward by BZX to justify the safety of the funds are not sufficient to eliminate fears of price manipulation.

SEC Clarifies: They Are Not Against Cryptos

SEC was emphatic in mentioning that the decision focuses on the BZX argument and that they do not deny the value that Bitcoin or DLTs can have as innovations in the business world:

“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. Rather, the Commission is disapproving this proposed rule change because, as discussed in detail below, BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.”

The SEC mentioned that it is very possible that over time conditions will be created for crypto ETFs to meet the requirements of state agencies thus allowing for a healthy crypto-market to exist within U.S. territory:

“The Commission notes that regulated bitcoinrelated markets are in the early stages of their development. Over time, regulated bitcoin-related markets may continue to grow and develop. For example, existing or newly created bitcoin futures markets may achieve significant size, and an ETP listing exchange may be able to demonstrate in a proposed rule change that it will be able to address the risk of fraud and manipulation by sharing surveillance information with a regulated market of significant size related to bitcoin … Should these circumstances develop, or conditions otherwise change in a manner that affects the Exchange Act analysis, the Commission would then have the opportunity to consider whether a bitcoin ETP would be consistent with the requirements of the Exchange Act.”

For SEC Com. Hester Peirce Such Allegations Are Not Enough

Ms. Peirce deems this argument to be contradictory as decisions such as the one taken simply hamper the changes that SEC itself consider would be positive should they occur.

Ms. Peirce’s letter made her popular in the community. In several Reddit Forums as well as Ms. Peirce’s Twitter account there are statements of support for her position as the voice of the crypto community in the SEC.

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Coinbase Retracts SEC Approval Claims

Coinbase has retracted reports of obtaining SEC approval for a trio of acquisitions in its quest to become a broker-dealer. The company also said it only discussed aspects of the deal with SEC officials and didn’t require the Commission’s go-ahead. This is the second time in as many days where a significant piece of news in the industry has been retracted or denied.

Coinbase Didn’t Receive SEC Endorsement

Reports emerged on Monday (July 16, 2018) that Coinbase had obtained approval from the United States Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) to acquire three companies. These companies were Keystone Capital, Venovate Marketplace Inc., and Digital Wealth LLC. The acquisitions enabled Coinbase to operate as a registered broker-dealer for the crypto securities market.

However, the company retracted those reports, yesterday, (July 17, 2018). In an email to Bloomberg, Coinbase spokesperson, Rachael Horowitz, said:

It is not correct to say that the SEC and FINRA approved Coinbase’s purchase of Keystone because [the] SEC was not involved in the approval process.

SEC Approval Was Not Required

Horowitz also went on to say that the Commission’s approval was not required for the deal. According to Horowitz:

The SEC’s approval is not required for the change of control application. Coinbase has discussed aspects of its proposed operations, including the acquisition of the Keystone Entity, on an informal basis with several members of SEC staff.

The retraction from the San Francisco-based cryptocurrency exchange platform is the second significant news to be retracted or denied in as many days. Reports also recently emerged that BlackRock was putting together a team to examine the merits of crypto-based investments. However, a few hours later, company CEO, Larry Fink dismissed those claims.

In the meantime, cryptocurrency investors will also be wondering what is to become of Coinbase’s bid to be a regulated broker-dealer. The main highlight of the plan is the listing of ICO tokens. The SEC has frequently classified ICO coins as security tokens. The following days and weeks will likely shed more light on the matter.

Are you concerned about the mixed reports that seem to be becoming a theme in the market? Keep the conversation going in the comment section below.

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