<p>David Weisberger, co-founder and CEO of CoinRoutes, says there are three main flaws in the U.S. Securities and Exchange Commission’s (SEC) reasoning in delaying and rejecting applications for a bitcoin-based exchange-traded fund (ETF).</p> <div id="1574654563.001700" class="c-virtual_list__item" tabindex="-1" role="listitem" aria-expanded="false"> <div class="c-message c-message--light c-message--adjacent" role="document" data-qa="message_container" data-qa-placeholder="false"> </div> </div> <div id="1574654578.001900" class="c-virtual_list__item" tabindex="-1" role="listitem" aria-expanded="false"> <div class="c-message__visually_hidden_label" aria-live="assertive">On October 9, the SEC <a href="https://www.sec.gov/rules/sro/nysearca/2019/34-87267.pdf">denied</a> a proposal by Bitwise and NYSE Arca to create a bitcoin-backed ETF, stating that the proposed ETFs did not meet the requirements of a section of the Exchange Act, which demands national securities exchange to “prevent fraudulent and manipulative acts and practices." The rejection marks another vain attempt to establish the first bitcoin ETF.</div> </div> <p>Weisberger is the former managing director of Citigroup and was responsible for building out the company's electronic trading systems. In a recent <a href="https://www.coindesk.com/the-case-for-a-bitcoin-etf">op-ed</a> published in CoinDesk, he finds fault with the SEC’s argument for three main reasons.</p> <p>First, there already exist many self-proclaimed bitcoin exchanges that meet the standards of money center or trust bank regulation, he says, and there has been no proven “fake and non-economic activity." In fact, according to Weisberger, these exchanges provide sufficient liquidity for price discovery.</p> <p>Second, he argues that compared to gold, silver, and other precious metals that have already been approved for ETFs, bitcoin offers a far greater level of transparency. While the former’s spot prices take place on a negotiated basis with a bid-ask spread of over 4%, bitcoin pricing can be accessed from a number of markets running electronic data and has a bid-ask spread of less than 1%.</p> <p>Third, allegations of manipulation are present regarding other commodities as well, as demonstrated by the <a href="https://www.justice.gov/opa/pr/current-and-former-precious-metals-traders-charged-multi-year-market-manipulation">RICO case</a> against precious metal traders in September. Weisberger believes that the SEC shows its bias by holding bitcoin to a higher standard given that bitcoin is neither more subject to potential manipulation nor operates in a market that is harder to monitor. It does not make sense to favor those commodities while delaying bitcoin’s ETF approval, he says.</p>