In recent years, the SEC (the us securities and exchange Commission) has received many applications for the inclusion of ETFs in Bitcoin, but they have all been rejected.

The Winklevoss brothers, owners of the Gemini exchange, were the first to try. They filed their applications with the SEC back in 2014, hoping that the BatsBZX exchange would appear on the network, but all was in vain.

Both brothers were not discouraged and soon filed a petition asking the SEC to consider it. Suddenly, the SEC again refused to brothers, and bitcoin fell by more than $300 in the next hour.

After the second refusal, the SEC published a 92-page document detailing the reasons for the refusal.

Reason 1: it is Hard to prove that Bitcoin is protected from manipulation

According to supporters, including BZX, Bitcoin is a global market. Arbitration between different markets, this method of distribution of funds prevents the concentration of funds in a certain place. The price of BTC in different markets is basically the same, which reduces the possibility of manipulating the exchange.

The SEC believes that the proponents did not come up with reliable data or factual data to prove that arbitration can effectively prevent price manipulation. Even if market participants split their funds into arbitrage between transactions, they can manipulate transactions within a particular exchange by pooling funds and transactions. They also do not believe that market participants are monopolists, will not use their strong positions to manipulate the market.

The price of bitcoin can be influenced by manipulating the behavior of the trading market. BZX does not have enough evidence that the structure of the Bitcoin spot market is uniquely robust, and does not prove that Bitcoin exchange and Altcoins trading market does not require regulation.

Since bitcoin does not have inside information such as income or profits, there is considerable nonpublic information in the market. For example, the ratio of regulators, market participants significantly increases or decreases the number of bitcoin holdings, as wallet providers face bitcoin forks and so on.

Hacking and malicious management of the bitcoin network are the other two risks. Hacks and attacks on exchanges can affect liquidity and cause price volatility by artificially increasing or lowering the price of bitcoins. Over the past four years, some exchanges have been closed due to fraud, disruptions or security breaches, and their clients have not received adequate compensation.

In addition, the SEC believes that 1000 people own 50% of bitcoins. Those who previously held large amounts of bitcoin from mining still have a potential impact on the market, i.e. individuals or organizations with monopoly positions have the ability to market manipulation.

Reason 2: it is Difficult to detect and stop fraud or market manipulation

The SEC believes that there is no General regulatory agreement at this stage that can govern the larger bitcoin market, and this agreement should meet the requirements of the transaction Law to prevent fraud and manipulation of market events.

According TO the bzx listing rules, registered market makers can receive trading information about Bitcoin and derivatives that is limited to trading behavior of registered participants and does not apply to all bzx market participants.

The ability of BZX to track transactions and the ability to share monitoring information with other exchanges does not allow IT to gain insight into the OTC market, as well as the personal and trading behavior of other exchange participants.

Although BZX receives public data from the blockchain, but these addresses are anonymous, there is no way to distinguish transfers between accounts from transactions of holders. It is also difficult to know whether these anonymous transactions are from people or from monopolists who use their positions to manipulate the price of Bitcoin. Since it is not known who is standing, it is naturally difficult to effectively prevent fraud and market manipulation.

Reason 3: the Lack of a common regulatory agreements

While BZX claims to use traditional methods to detect and stop fraud and manipulation, IT ignores the SEC's long-standing emphasis on the use of common regulatory protocols for fraud and manipulation detection. The joint regulatory agreement includes conduct in the trading market, liquidation conduct and customer identification, and the parties to the agreement are entitled to receive and provide this information.

This agreement has a very Mature experience in the securities derivatives market, and both commodity exchanges, such as gold, silver and copper, have signed an agreement on joint control.

BZX stated that it signed a General agreement with Gemini exchange, which is governed by NTSDFS. But if the analogy is on an exchange or an approved commodity futures exchange, then the Twin exchange is not a "regulated market" and its trading rules are not subject to regulatory review or approval.

Reason 4: it is Difficult to protect investors and public interests

Bitcoin proponents believe that investing in Bitcoin via ETP can reduce costs, complexity, and risk. "Winklevoss Bitcoin Trust claims that it will make the Bitcoin market more transparent. Also make portfolios more diverse.

The SEC recognizes that these are potential benefits, but the SEC needs to verify that the proposal meets all the requirements of the transaction Law. That's not so. The SEC found that there are many inconsistencies between the PROPOSED bzx rules and the requirements of the transaction Law.

The potential BTC market is not liquid enough to counter the issue of market integrity. For example, disruptions to large exchanges can limit Bitcoin liquidity, leading to price fluctuations, a single exchange can reduce price volatility and reduce liquidity.

The Bitcoin derivatives market is still in the early stages of development in regulated markets and does not give investors a reliable opinion about Bitcoin's future prospects.

Bitcoin ETF continues to be a serious problem in the cryptocurrency market

The founder of Fundstrat — TomLee said in an interview with CNBC that if the Bitcoin ETF is approved, it will be possible to make bitcoin tangible and we will return to the highest level in history.

APP Scallion mentioned if Bitcoin ETF is approved, first immediately reduce the fees for Bitcoin trading, which will bring a lot of money into the segment. Secondly, it will accelerate the development of the cryptocurrency industry, for example, the promotion of asset storage. Third, the adoption of ETFs is equivalent to informing that officials have recognized Bitcoin as a legitimate asset class, changing the General view of the risk of cryptocurrency regulation, the digital currency will be accepted by the public.