The Securities and Exchange Commission (SEC) has rejected an application for a rule change that would allow the listing of a bitcoin ETF in the US.
The Bats BZX Exchange filed the proposed rule change to list and trade shares of the Winklevoss Bitcoin Trust in June 2016.
Tyler and Cameron Winklevoss are twin brothers who were made famous by their legal dispute with Mark Zuckerberg about the origins of Facebook.
The SEC finding rejected the brothers' application on the grounds that the bitcoin exchange lacks surveillance-sharing agreements and is unregulated.
News of the SEC decision sent the price of bitcoin tumbling by as much as 18 per cent on Friday to as low as US$1,000.
The price of bitcoin has since regained ground to US$1,236.73 at the time of writing.