The Securities and Exchange Commission announced today that it would deny a proposed rule change that would have permitted the first exchange traded fund to track digital currency. If granted it would have permitted the Bats BZX Exchange, Inc. (“Exchange”) to list and trade shares issued by the Winklevoss Bitcoin Trust on the Exchange. The SEC found that the proposed rule change was inconsistent with the Securities Exchange Act of 1934 as the Exchange would be unable to enter into the necessary surveillance sharing agreements given that many digital currency exchanges are located overseas and largely unregulated. Notably, the reasons for the disapproval do not appear to be related to the specifics of the filing, but rather to larger concerns about the unregulated nature of bitcoin. The SEC did indicate that it might consider similar applications in the future stating: “[t]he Commission notes that bitcoin is still in the relatively early stages of its development and that, over time, regulated bitcoin-related markets of significant size may develop.”