On April 24, 2017, the SEC issued an order granting review of its previous decision in March (the disapproval order) to block the listing and trading of shares of US exchange-traded fund (ETF) Winklevoss Bitcoin Trust on the Bats BZX Exchange. The Winklevoss Bitcoin Trust holds bitcoins and values them based on their value on the Gemini Exchange, a digital-asset exchange.

In explaining the disapproval order, the SEC noted that bitcoin markets are largely unregulated and that the exchange would be unable to adequately address concerns about the potential for fraud.

The SEC is reviewing its disapproval order based on a petition filed by the exchange, pursuant to Rule 430 of the Rules of Practice (15 USC 78s(b)(2)(B)). Parties may file a written statement in support or opposition to the disapproval order on or before May 15, 2017.

Bitcoin is a virtual currency that can be used to move money globally with relative anonymity, without the need for a central authority such as a bank or government. Proponents assert that a fund holding the currency could bring more professional investors to the asset and push its price higher. However, bitcoin presents a new set of risks to investors given its limited adoption, a number of cybersecurity breaches affecting bitcoin owners, and inconsistent treatment of the asset by governments (see Practice Note, Virtual Currency Regulation: Overview).

This Update is based, in part, on material provided by the Reuters News Agency (http://www.reuters.com/).