The cryptocurrency industry is expecting a debut of bitcoin-ETF (the exchange trading fund) by the end of 2018. However, some analysts believe that its appearance should not be awaited until 2019.
As a publicly traded instrument, bitcoin-ETF can open a flow of capital to the crypto market from retail and individual accredited investors. Unlike the platforms that allow direct investment in cryptocurrencies, issuers of bitcoin-ETF are responsible for protecting investors' funds and their insurance.
Consequently, investors who were previously reluctant to invest in the cryptocurrency sector due to security and regulatory issues are likely to invest in this market through ETF.
A well-known crypto investor Nicholas Merten, explains why the bitcoin-ETF is important:
Here’s why a bitcoin ETF matters:
— Nicholas Merten (@Nicholas_Merten) July 24, 2018
With the release of an ETF, this allows investors to add bitcoin to their retirement portfolio.
Global Pensions Market: $41.3T
If bitcoin captures just 1% of global pensions, that would create $413,000,000,000 of exposure for cryptocurrencies.
Most investors, analysts, and researchers both in the cryptocurrency market and in the traditional financial sector are optimistic about the approval of bitcoin-ETF. Kevin O'Leary of AKA Mr. Wonderful, one of the stars of Shark Tank, said that the approval of bitcoin-ETF could lead institutional investors to the cryptocurrency market in the near future.
At the same time, Brian Kelly, the executive director of BKCM, said that the first bitcoin-ETF will not be approved in 2018, given how often the U.S. Securities and Exchange Commission (SEC) postpones the decision on this issue:
“I also hope there is an ETF. But I think the chances of a bitcoin ETF in 2018 are relatively low. There is still quite a few things. That doesn’t stop speculation on that. That’s one reason why we’ve seen this bottoming process here from $5,800 to $8,500”
What to expect from regulators?
This week, sources close to the SEC and the Commodities Futures Trading Commission (CFTC) said that regulators will approve the first bitcoin-ETF by the end of the year. At the same time, one of them noted that a positive decision, most likely, can be expected already in September.
At the same time, the SEC postponed the decision regarding five bitcoin-ETFs from Direxion Investments until September. In its statement, the SEC explained that it needs a “sufficient time to consider this proposed rule change.”
Note that the SEC statement does not mention actively discussed applications of VanEck and SolidX. On July 9, The Chicago Board Options Exchange (CBOE), sent another application to the SEC for the opening of Bitcoin-ETF.
The Securities and Exchange Commission has repeatedly rejected such requests on the grounds that it considers Bitcoin to be an unregulated currency, but the situation was changed by the statement of its division head that this coin is not a security. It is assumed that the new fund will trade in SolidX shares, each of which will cost 25 bitcoins.