New York, March 11 (Reuters): The US Securities and Exchange Commission on Friday denied a request to list what would have been the first US exchange-traded fund built to track bitcoin, the digital currency.

Investors Cameron and Tyler Winklevoss have been trying for more than three years to convince the SEC to let it bring the Bitcoin ETF to market.

The digital currency's price plunged, falling as much as 18 per cent in trading immediately after the decision before rebounding slightly. It last traded down 7.8 per cent to $1,098.

Bitcoin had scaled to a record of nearly $1,300 this month, higher than the price of an ounce of gold, as investors speculated that an ETF holding the digital currency could woo more people into buying the asset.

Bitcoin is a virtual currency that can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government.

Yet bitcoin presents a new set of risks to investors given its limited adoption, a number of massive cybersecurity breaches affecting bitcoin owners and the lack of consistent treatment of the assets by governments.

"Based on the record before it, the commission believes that the significant markets for bitcoin are unregulated," the SEC said in a statement.

"The 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."