It may span only a couple of years, but the history of Bitcoin exchange-traded funds (ETFs) and the United States Securities and Exchange Commission (SEC) is already a long one. Back in March 2017, the SEC rejected the application for a Bitcoin ETF put forward by the Winklevoss twins, claiming that the underlying Bitcoin market was still too manipulable, volatile and resistant to surveillance. Fast forward to March 2019 and the SEC has still yet to approve a single Bitcoin ETF, with the comments to its latest public consultation remaining largely negative.
Such an absence of major progress may seem fatally discouraging to casual observers hoping for an ETF to provide crypto with added legitimacy. Nonetheless, the intervening period between March 2017 and the present day has witnessed a softening of the SEC’s stance, with members of the commission even going so far as declaring that they expect a Bitcoin ETF to be approved sooner or later. There is, then, plenty of reason to draw hope from the SEC’s recent dealings with Bitcoin ETF applicants, even if the longer-term history shows that the commission hasn’t always adopted a favorable stance toward crypto.
2017: SEC claims manipulability, volatility and absence of surveillance
On June 30, 2016, the Bats BZX Exchange filed a proposed rule change with the SEC, which would have permitted it to list and trade shares of the Winklevoss Bitcoin Trust. If approved, the Winklevoss’ ETF would have been the first Bitcoin exchange-traded fund licensed to appear on a fully regulated stock exchange, thereby making it possible for the layperson to gain exposure to Bitcoin without having to actually own the cryptocurrency or wrestle with crypto exchanges or wallets.