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Winklevoss twins lose bid to make bitcoin mainstream

March 11, 2017

Regulators have denied an application to allow an exchange traded fund for the cryptocurrency. This was the latest setback for the well-known Winklevoss brothers, who had a similar application denied four years ago.

USA Tyler und Cameron Winklevoss | Digitalwährung Bitcoin erreicht neues Rekordhoch über 1200 US-Dollar
Image: picture alliance/AP Photo/C. Ruttle

Bitcoin suffered another blow to its legitimacy late on Friday, when US federal regulators rejected a bid to push the online currency to a bigger pool of investors. The online currency had seen a surge in value over the news it may gain an exchange-traded fund (ETF), but lost that boon and then some after the news, plummeting 18 percent before leveling out.

The project, called "Coin," had been the brainchild of entrepreneurs Tyler and Cameron Winklevoss, who gained notoriety after suing Mark Zuckerberg over the idea for Facebook. After the Winklevoss twins announced that they had launched an ETF application, the value of bitcoin soared on the news that it may soon become easier and safer to trade with and invest in.

At one point earlier in March bitcoin made headlines when it surpassed the value of a fine ounce of gold, or nearly $1,300 (1,230 euros).

But the Securities and Exchange Commission (SEC) rejected Coin's application, saying it was incompatible with certain regulations designed to prevent fraud and protect investors.

Bitcoin's struggle to the surface

Introduced to the public in 2009, bitcoin is a cryptocurrency designed to cut out banks, credit card companies and other financial third parties as a means for buying goods and services. Because it has failed to gain the kind of legitimacy that an ETF would offer, however, it has failed to gain widespread support and has been subject to rapid changes in value.

"We remain optimistic and committed to bringing Coin to market, and look forward to continuing to work with the SEC staff," said Tyler Winklevoss, according to the "Wall Street Journal." 

"We began this journey almost four years ago, and are determined to see it through," he added, referring to the brothers' first ill-fated attempt at trading the currency via the Winklevoss Bitcoin Trust.

The Winklevoss' company is not the only planned bitcoin ETF, however. Later this month, the SEC is set to rule on a similar application by a fund called SolidX. A third financial group called Bitcoin Investment Trust (BIT) has already been open to an elite group of investors as it awaits a comprehensive stamp of approval.

What is a cryptocurrency?

es/se (AP, dpa)