The Bitcoin community doesn’t seem to be bothered by the US Security Exchange Commission’s decision to disapprove the Winklevoss twins’ Bitcoin ETF COIN like many analysts expected. The market’s stability after the denial of the COIN ETF led to discussions on why Bitcoin didn’t need an ETF to begin with.
Why SEC disapproved the ETF and why Bitcoin didn’t need it
Bitcoin is one of the only currencies or networks in existence which facilitates payments between two users with the absence of a mediator or a network administrator. Within Bitcoin, regulations are non-existent and manipulation-free transactions can be made, regardless of the amount or the size of the transaction.
While Bitcoin wasn’t necessarily designed to replace fiat money, it was introduced in 2009 to serve as an alternative to the global financial structure and ecosystem. Satoshi Nakamoto, the creator of Bitcoin, wanted to present a cash-like settlement network in which users aren’t required to undergo impractical and inefficient settlement processes in order to send and receive money from one another.
Over time, Bitcoin as a decentralized technology evolved, with the work of the Bitcoin Core development team as well as Bitcoin’s global and open source development team of contributors. The Bitcoin network’s hash power began to secure the network from external attacks and welcome tens of millions of new users into the network.
As Bitcoin and security expert Andreas Antonopoulos notes, the truly decentralized, transparent and secure financial network of Bitcoin is beginning to replace the financial industry and provide the general public with a low-fee and faster financial network.
Before considering the fact that hundreds of millions of dollars and potentially billions of dollars could have been poured into Bitcoin as a result of the approval of the COIN ETF, it is important to ponder the purpose of Bitcoin as a financial network. Its real purpose within the global financial frame is to allow people to make peer-to-peer payments amongst each other, not to gather large investments within a highly and tightly regulated market.
“If you measure Bitcoin’s success by the approval of the incumbent and obsolete industry it replaces, you’re doing it wrong.”
SEC’s disapproval is confirmation that Bitcoin is a decentralized network
Two main arguments presented by the SEC in their disapproval of the COIN ETF were that the SEC can’t protect investors from losses made while trading Bitcoin and that the Bitcoin network can’t be surveilled as easily as others.
Since the Bitcoin network completely eliminates the possibility of recovering transactions or refunding payments, it forces users to be more responsible. On PayPal for instance, a centralized financial network, users can ask network moderators if they mistakenly sent incorrect transactions or processed payments to the wrong receiver. Within the Bitcoin network, no such administrative team exists and users are solely responsible for their money and transactions.
If the SEC needs to guarantee investors and traders with an insurance policy, which basically means that when Bitcoins are lost or stolen or mistraded, the SEC should be responsible for protecting investors from any losses, it is highly unlikely that a Bitcoin ETF will never be approved by the SEC.
The official document of the SEC read:
“As discussed further below, the Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”
The SEC nor any other government organizations shouldn’t be responsible for protecting investors from making independent financial decisions. Also, it is almost impractical to introduce a highly regulated market to Bitcoin if Bitcoin was designed from the start to replace regulated markets and inefficient financial systems.