Threaded TL;DR of the Winklevoss ETF proposal & SEC rejection:
The Winklevoss ETF was intended to do the following:
* ETF would hold spot BTC bought via Gemini.
* NAV would be based on Gemini's daily auction.
* Each share was set to be worth 0.01 BTC.
The Winklevoss ETF was intended to do the following:
* ETF would hold spot BTC bought via Gemini.
* NAV would be based on Gemini's daily auction.
* Each share was set to be worth 0.01 BTC.
Ultimately, the main reason for rejection was that the market has too much potential for manipulation in the eyes of the SEC -- And thus doesn't meet the requirements of the Exchange Act.
This rejection specifically focused on the manipulation of the underlying spot markets.
This rejection specifically focused on the manipulation of the underlying spot markets.
They also (rightfully) took issue with that everything would be entirely dependent on the Gemini market.
Note that commenters also showed dissent around the ETF being based on Gemini due to potential for manipulation.
Note that commenters also showed dissent around the ETF being based on Gemini due to potential for manipulation.
However, more interesting than that -- The SEC does not find Gemini to sufficiently have shown that they are a valid regulated exchange.
Finally, on the point of new $BTC derivatives now being traded and making the market harder to manipulate -- The SEC states that CME/CBOE futures are not sizable enough to matter to the market yet.
Summary:
- SEC believes the spot market has too much potential for manipulation.
- States that only using Gemini isn't good enough & that it's too low volume/liquidity.
- Says that: "(No) current trading venue in the worldwide bitcoin spot market is a regulated market."
- SEC believes the spot market has too much potential for manipulation.
- States that only using Gemini isn't good enough & that it's too low volume/liquidity.
- Says that: "(No) current trading venue in the worldwide bitcoin spot market is a regulated market."
Major differences between the Winklevoss vs VanEck/SolidX proposal:
Winklevoss ETF was accessible to retail b/c it was set to 0.01 BTC per share, making it less likely to be approved.
The VanEck proposal sets each share to be worth 25 BTC -- thus restricting access.
Winklevoss ETF was accessible to retail b/c it was set to 0.01 BTC per share, making it less likely to be approved.
The VanEck proposal sets each share to be worth 25 BTC -- thus restricting access.
Winklevoss ETF's entire structure & NAV pricing was based around Gemini, which let the SEC have an easier argument as to why the ETF could be manipulated.
The VanEck proposal is more advanced than this using OTC markets for the NAV & incorporating multiple exchanges into it.
The VanEck proposal is more advanced than this using OTC markets for the NAV & incorporating multiple exchanges into it.
Some highlights in terms of quotes from the response:
A claim that spoofing doesn't occur:
'Both the Overdahl Letter and the Lewis Letter contend that bitcoin markets are not subject to “spoofing,” a manipulative quoting strategy'
A claim that spoofing doesn't occur:
'Both the Overdahl Letter and the Lewis Letter contend that bitcoin markets are not subject to “spoofing,” a manipulative quoting strategy'
Tether was also mentioned:
"One recent academic paper examined whether the growth of the circulating supply of Tether through new issuances is primarily driven by investor demand, or is supplied to investors as a scheme to profit from pushing cryptocurrency prices up."
"One recent academic paper examined whether the growth of the circulating supply of Tether through new issuances is primarily driven by investor demand, or is supplied to investors as a scheme to profit from pushing cryptocurrency prices up."
