The irrepressible Winklevoss twins, known for having sued Mark Zuckerberg over the idea for Facebook, have suffered a setback from federal regulators in their push to expand the use of bitcoin to a wider universe of investors.
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The Securities and Exchange Commission rejected Friday a proposed Winklevoss exchange-traded fund that could have opened the digital currency to larger numbers of ordinary investors.
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The SEC said the proposal from Tyler and Cameron Winklevoss was inconsistent with rules for securities exchanges designed to prevent fraud and manipulation, and to protect investors.
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Bitcoin, which is stored in encrypted digital wallets, allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties. About 8 years old, it has yet to be broadly embraced and has been prone to wild price swings.
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The value of a single bitcoin fell 7.6 percent to $1,101 on Friday following news of the SEC’s rejection. Since 2013, its value has rocketed from $13 to a peak of around $1,300. On a given day, bitcoin can fluctuate by 20 percent or more. It’s increased nearly 30 percent so far this year.
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Currently the ways of buying and investing in bitcoin are fairly limited: on online exchanges or through a trust that charges premium prices.
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The 35-year-old identical-twin entrepreneurs have been evangelists for bitcoin in recent years, insisting it could even replace gold as a stable currency. They’ve promoted their company Gemini as a stock market for bitcoin. Last year, New York state approved regulations governing a new exchange operated by Gemini for a virtual currency called Ether.
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In a 38-page order posted on its website, the SEC rejected the application by the Winklevoss brothers and the BATS BZX Exchange to list and trade Winklevoss Bitcoin Shares, an exchange-traded fund based on bitcoin.
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The significant markets for bitcoin are unregulated,…