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The SEC Just Handed Bitcoin a Huge Setback (theverge.com)

Posted by msmash on from the setback dept.

The SEC has decided to deny an application for the first exchange-traded product that tracks the price of bitcoin, according to an order posted on the regulator's website. From a report: In an order today, the commission found that the proposed fund was too susceptible to fraud, due to the unregulated nature of Bitcoin. The result is a major setback for the fund, and a frustrating false start for the crypto-currency at large. The ETF is essentially a common stock fund pegged to the price of Bitcoin, allowing investors to purchase Bitcoin without the work of establishing a personal wallet. (In concrete terms, the ETFs investors will be buying shares whose price will always be the same as the price of a single bitcoin, similar to an equivalent investment in gold or cattle.) Without a wallet, investors still won't be able to spend Bitcoin, but they can buy and sell it at market price, adding more liquidity to the Bitcoin system overall.

7 of 73 comments (clear)

  1. Bitcoin not setback at all. by HornWumpus · · Score: 5, Insightful

    Now investors need to actually buy bitcoin, not just some shadow fund that may of may not actually hold bitcoin. Likely the fund would play arbitrage and create virtual bitcoins by matching short and long positions into nothing but profit for them.

    Having a fund might somehow 'add liquidity', but only a small share for the liquidity that investors buying/selling actual bitcoin will add.

    --
    John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
  2. No by sexconker · · Score: 4, Insightful

    No, this is not a setback for Bitcoin. It's a setback for some shitclowns who want to sell Bitcoin via an ETF.
    Bitcoin - the network, currency, and blockchain - are unaffected by this.

  3. Ah the irony.... by Anonymous Coward · · Score: 2, Insightful

    "Can't accept bitcoin because it's too susceptible to fraud" could almost be translated to "we don't see enough loop holes or other ways to exploit this new currency, yet"

    1. Re:Ah the irony.... by Goaway · · Score: 2, Insightful

      Sure, it could, if you were insane.

      In reality, it means bitcoin is too susceptible to fraud.

    2. Re:Ah the irony.... by lgw · · Score: 4, Insightful

      The SEC is one of the good guys when it bothers to do its job. It's failings are failings to apply its regulations. The market rules - the majority of which are the rules of the markets, but the SEC is also important - defeat centuries of history of ways to scam the market. There are a constant stream of new ways, sure, but the wealth of old ways are really quite bad.

      --
      Socialism: a lie told by totalitarians and believed by fools.
  4. SEC is ridiculous. Never fraud at Bitcoin exchange by raymorris · · Score: 3, Insightful

    Yeah that statement from the SEC is ridiculous. There's never been any hint of fraud around any Bitcoin exchange. Okay maybe a couple of small exchanges have had issues, but never the big exchanges that handle 3/4 of all Bitcoin transactions, like Mt Gox. There could never be any fraud at Mt Gox.

  5. Re:not really a setback by borcharc · · Score: 3, Insightful

    Because the "fraud" could be conducted by unapproved players who are not paid up with the right people. that can not stand!