Bitcoin has thrice been turned down by the U.S. Securities and Exchange Commission (SEC) in their Exchange-traded funds (ETF) application, the latest of which was one of the Winklevoss brothers applications. Each time specific reasons were given.
All these developments lead us up to a very reasonable question. Is it necessary for bitcoin to get an ETF? Presented here are some expert opinions regarding the matter.
Netcoin founder, Michael Vogel doesn’t believe that a bitcoin ETF will play a big role in the success of the first cryptocurrency, however, he does see it as “an interesting idea.” For Vogel, an ETF would mean a move towards Wall Street seeing bitcoin as a legitimate financial instrument, giving conventional traders access to bitcoin.
“A large ETF would likely have a significant impact on bitcoin prices as well, not just due to trading volume but simply because of the volume of bitcoin that it would remove from the liquid trading market (because the BTC would need to be permanently held by the ETF corporation)”.
Alena Vranova, an advisor to companies in the crypto business and founder of Trezor, a hardware crypto wallet, believes that this move towards an ETF is not needed for the bright future of bitcoin. Vranova acknowledges that in the short-term bitcoin will benefit from new investors, that will view bitcoin as something more legitimate, from the publicity and in her opinion, the prices may drastically increase. However, she advises being cautious whilst hodling.
“Everyone who wants to hodl on, please make sure your bitcoin is safe against hackers, because their interest will skyrocket too. I’d recommend to abandon any custodian service, set up some of the proven hardware wallets (TREZOR or Ledger), set up a non-custodian multisig wallet (such as CASA) and read Pamela Morgan’s book on crypto asset inheritance.”
Dana Coe, the founder of Bitlox, a hardware mobile crypto wallet, and tech consultant at CryptoCrest, a company that provides technical solutions to crypto firms, reckons that it an ETF is just another fund and there is nothing special about it. Coe elaborates that ETFs are trading assets that are regulated, for example by SEC or by the Commodity Futures Trading Commision (CFTC), cryptocurrencies, on the other hand, aren’t regulated by either of them, not giving them a status of a security.
Coe went on to say that not the funds themselves would be appealing for bitcoin in an ETF, but the opportunity to sell membership interests in any fund type using large broker-dealers. Not the ETF, but the funds could have their membership interests be bought by means of Vanguard or similar.
Coe finished by saying:“In the end that’s how it works anyway – the difference being they aren’t listed on an exchange.”
While the crypto community waits for the upcoming SEC September decision on ETFs for bitcoin, experts and users in the community will carry on wondering what outcomes may be expected in the short and long run of the game.
WHY IS THIS IMPORTANT?
- Whatever the result to come, awareness and interest in bitcoin is increasing.
- A movement towards bitcoin becoming regulated is apparent, which means more investors and users.