SEC Takes Time to Think on Bitcoin-ETF

The U.S. Securities and Exchange Commission (SEC) announced the beginning of a formal process for considering the application for creating a bitcoin-ETF from New York companies VanEck and SolidX but contacted the community for more information.

The Office published an "order instituting proceedings to determine whether to approve or disapprove a proposed rule change" issued by CBOE BZX. At the same time, the head of the department underlined that the beginning of this process does not mean that the Commission came to any conclusions on the issues raised. The regulator needs more input from parties interested in approval to reach a decision.

According to the document, the Chicago Board Options Exchange (CBOE) has signed an agreement on the exchange of data on bitcoin transactions, trading, and the state of the market with the crypto trading platform Gemini owned by Winklevoss brothers. The agency asked commentators to clarify the position of Gemini in the digital currency market and assess the likelihood of increased volatility on this site in connection with possible bitcoin-ETF trades. At the moment, the SEC received about 1,400 comments.

VanEck and SolidX filed a joint bid for bitcoin-ETF in early June of this year. If approved by the regulator, CBOE will be able to add the product to the listing. Until September 30, the department had to approve the application, refuse to start, or initiate the proceedings. The SEC chose the last scenario, which is likely to delay the process until the next year.

In August, the SEC has already rejected another ProShares application for a new investment product. The Commission decided to deny the appeal to create tradable funds by the stock exchange companies ProShares, Direxion, and GraniteShares. The regulator considered that the trading platforms had not fulfilled their obligations to combat fraud and market manipulation.

In July, the department rejected the application of Winklevoss brothers to launch bitcoin-ETF. Back in 2016, the Bats BZX Exchange, Inc. (BZX) has requested from the SEC a permission to start trading shares of Winklevoss Bitcoin Trust. However, in February 2017 the application was rejected. The SEC leaned on a reason of the lack of regulation in the bitcoin market. Then Winklevoss brothers filed a petition to review the decision of the commission. According to the twins' position, the bitcoin market has a unique resistance to manipulation. Nevertheless, the petition was rejected on July 26, and the SEC reported that it does not support such a conclusion.

Bitcoin-ETF (Exchange Traded Fund) is a traded fund on the basis of bitcoin. In fact, these are shares of a fund, the value of which is expressed in cryptocurrency. For example, you have several bitcoins and you released securities on them, each costing 3 bitcoins. Thus, a trader who buys these shares directly invests fiat in crypto. But at the same time h,e or she does not need to register on the crypto exchange, get a digital wallet, and keep a key.

Bitcoin-ETF allows the investor to buy a valuable paper for possession of bitcoin, and at the same time avoid worrying about safety and risks of hacking. Investors are protected in this case. They won’t deal directly with the digital money, and therefore their assets will be under reliable protection. Unlike exchanges which get repeatedly cracked by hackers for hundreds of millions of dollars, issuers of bitcoin-ETF are responsible for saving customer funds and their insurance.

The adoption of a bitcoin-ETF, that is, the resolution of such a derivative in traditional markets would mean that the cryptocurrencies have already been adjusted enough and received the trust of regulators in order to gain access to institutional investors.

Crypto community reacts in different ways to the excitement around the launch of bitcoin-ETF. The founder of Ethereum Vitalik Buterin is confident that this topic capturing the crypto community is not quite right. According to him, the digital money must be promoted in such a way that everyone can pay off the cryptocurrency at a nearby store, and investment funds are less important.

In turn, the CEO of Fatfish Group Kin Wai Lau, argues that the launch of crypto-ETF will positively affect the market. The industry will be ready for them in the near future, and this will allow the prices for cryptocurrencies to increase significantly.

And he is not the only one who holds this opinion. Many experts have already stated that the price of bitcoin will grow strongly once the first stock investment bitcoin fund is approved. If SOLIDX bitcoin-ETF receives green light, it is likely to become a catalyst for a sharp rise in the price of bitcoin and the entire crypto market, the heads of Van Eyck Investment and SolidX are confident.

Also, according to some experts, the chances for the approval of a bitcoin-ETF will increase significantly due to the appointment of a new member to the SEC, Elad Roizman, a well-known supporter of exchange investment funds. Earlier Roizman repeatedly said that the US government should provide fair treatment to digital money, ICO, and blockchain. The authorities should make the industry as transparent and safe for investors as possible.