Last Chance to Persuade: SEC Meets Bitcoin-ETF Applicants Second Time
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Main page Analytics, SEC, Regulations, Bitcoin-ETF
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Nov. 30, 2018
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Representatives of VanEck, SolidX, and Cboe BZX Exchange one more time met with the U.S. Securities and Exchange Commission (SEC) earlier this week to present new arguments of why the market was ready to accept bitcoin-ETF. From the SEC side, the meeting was attended by representatives of the corporate finance, trading, and market departments, as well as the office of the General Counsel.

SEC Talks to Industry, Is Bitcoin-ETF a Go?

The last attempt to persuade the authorities was different from previous ones when the applicants tried to put pressure on the regulatory side of the issue. Instead, they drew attention to the fact that the idea of the bitcoin market was mature enough to support the ETF, and in many ways resembled the markets for other assets where exchange products were already available. The presentation included several examples of such products, in particular, tied to oil, silver, and gold.

The authors of the presentation pointed to the relationship of futures and spot markets, noting that in cases of gold and silver, this relationship can be confirmed by empirical results. Also, in their opinion, such connection between two markets prices speaks for “a well-functioning capital market.”

They claim that the bitcoin ecosystem is “less susceptible to manipulation” than other commodities already existing at the market of exchange-traded products. So, insiders can possess information on the offer of a tangible exchange commodity, for example, if a new field is discovered or production is reduced, which in turn may affect the price.

Bitcoin is devoid of such problems, according to the applicants, who add:

“The linkage between the bitcoin markets and the presence of arbitrageurs in those markets means that the manipulation of the price of bitcoin on any single venue would require manipulation of the global bitcoin price in order to be effective … Bitcoin therefore is no more susceptible to manipulation than other commodities, especially as compared to other approved ETP reference assets.”

Any attempt to manipulate the price of bitcoin will require “overcoming the liquidity supply of such arbitrageurs who are effectively eliminating any cross-market pricing differences.”

The authors of the presentation have also reminded the SEC that they launched an over-the-counter bitcoin price index, which could also have a positive impact on the ETF.

SEC Head: Bitcoin ETF Rejected Due to Manipulation

The SEC Chairman Jay Clayton said this week that in the face of market manipulation, Bitcoin-ETF approval was out of the question.

According to the rules, the Commission must come up with the decision until February 27, 2019.

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