When the US Securities and Exchange Commission denied the Winklevoss twins' application to open a bitcoin fund on the markets in early March, it was a crushing blow to morale in bitcoinland. On Monday, in a move that is once more igniting the hopes of bitcoiners, the SEC announced that it's reviewing that decision. Now, the possibility of the fund being approved is alive again.
If the fund is approved, it would be a sign to many that bitcoin is finally accepted by the powers that be as a legitimate asset; this has been a never-ending struggle for bitcoin, which is still kind of in its infancy after being introduced almost a decade ago, in late 2008.
The Winklevoss' fund is technically called an ETF, or exchange-traded fund, and it works like this: The Winklevoss twins buy a bunch of bitcoin in the hopes that the whole pot rises in value as the price of bitcoin goes up. Investors will be able to buy shares in the fund to get a piece of the action.. The SEC initially denied the application on the grounds that even if the fund conforms to their regulations, the underlying market for bitcoin is unregulated and (the SEC argued) can be unfairly manipulated.
Immediately after the SEC denial, the stock exchange that the ETF would be traded on—called Bats—filed a petition asking that the decision be reviewed. The exchange took issue with several assertions in the SEC's decision. Namely, Bats argued that bitcoin's use of math and economic incentives would make it difficult to manipulate, and since transactions are posted publicly to the blockchain and updates to the protocol are relatively transparent, bitcoin actually poses less of a risk for manipulation than precious metals that are traded freely on commodities exchanges.
It's unclear what, exactly, will come of the SEC re-opening the case of the Winklevoss trust. The situation is doubly confusing considering that Bats' petition was approved not even two months after it was filed—much more quickly than is normal—raising some eyebrows.
Still, bitcoiners are now cautiously optimistic. Since the last round of SEC deliberation on the fund was a complete rollercoaster, let's hope that everyone manages to keep a level head this time around.
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