Bakkt Could Lead to the Approval of the First Bitcoin ETF
The SEC has disapproved 10 Bitcoin exchange-traded funds (ETFs) in the past month but analysts believe Bakkt can assist the launch of the first bitcoin ETF.
Bakkt’s Efforts in Finding Trusted Price Formation
Last month, the SEC officially rejected the Winklevoss Bitcoin ETF filed with the Bats BZX Exchange with a 92-paged document which explicitly stated that the commission was not satisfied with the dependence of the value of the ETF on public cryptocurrency exchanges.
Specifically, the SEC said that strictly regulated exchanges like Gemini operating in the US market with a proper license are still not resistant to manipulation, and hence, there exists risk involved in basing the base value of a bitcoin ETF on the price listed on exchanges.
“In Section III.B, the Commission addresses BZX’s assertion that bitcoin and bitcoin markets, including the Gemini Exchange, are uniquely resistant to manipulation and finds that the record before the Commission does not support such a conclusion,” the SEC said.
But, the SEC further emphasized that the disapproval of the Winklevoss Bitcoin ETF does not signify the commission’s stance on cryptocurrency or blockchain but simply the lack of a trusted price formation that may leave the ETF and the global Bitcoin market open to price manipulation.
The SEC added:
“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.”
Conclusively, the denial of the Winklevoss ETF mainly pertained to its reliance on Gemini to establish the value of BTC, which the SEC did not approve of.