The SEC just issued their ruling on the Winkelevoss bitcoin ETF, and it wasn’t good news for enthusiasts of the digital currency. Regulators rejected the proposed application, mainly because of the lack of regulation currently surrounding bitcoin.

An approval would have meant that the public could invest in bitcoin simply by purchasing shares in the ETF, which would trade on a U.S-based stock exchange.

The assumption was that an approved ETF would open the floodgates to both Wall Street and regular investors who want a stake in the digital currency but didn’t feel comfortable purchasing it on their own. This influx of new investors would then drive up the price of bitcoin.

Instead, the price dropped about 22 percent, from about $1,295.00 to as low as $1,000 as soon as the news broke. It’s since stabilized to about $1,120.00, which is still a drop of about 14 percent.

In its decision, the SEC explained that a Bitcoin ETF would not be consistent with current rules requiring securities exchanges to regulate and monitor the markets where underlying products are traded. Essentially, the underlying markets that currently exist for trading bitcoin aren’t regulated enough to responsibly support an ETF that would rely on those markets for liquidity.

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 Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated. – the SEC

Tyler Winklevoss released a statement via email to Forbes: “We remain optimistic and committed to bringing COIN [the ETF’s proposed ticker] to market, and look forward to continuing to work with the SEC staff. We began this journey almost four years ago, and are determined to see it through. We agree with the SEC that regulation and oversight are important to the health of any marketplace and the safety of all investors.”

While there are two more bitcoin ETF applications still in a review period, the outlook isn’t good. This is because it seems that the regulators didn’t take issue with the Winklevoss application, they were just concerned with the lack of regulation surrounding bitcoin in general . This lack of regulation is an issue that will stay around either until bitcoin markets mature enough to implement regulations consistent with existing markets that trade other commodities or derivatives, or until the Exchange Act’s laws are changed or altered to provide an exception for bitcoin.