Bitcoin ETF seems to be a hot topic in the cryptocurrency world lately. And if you into that, you trade, or you are just interested in the future of the digital money, I am sure you wondered what all this fuss is about. An endless subject in the crypto discussions is the level of security and the legal aspects of the digital assets. Do not get this wrong, regulations do not make fiat currencies safer or less risky to trade. They just bring normativization in the process of their trading and introduce the financial tools to the big economical markets. Something which is time to happen to cryptos as well, regarding their broad usage and huge global interest.
So, let us start with the basics here. ETF is an abbreviation of exchange-traded funds, or in other words, all these mysterious things traded on the stock exchanges like securities, futures, etc. For Bitcoin to receive an ETF means to become tradable on the stock exchanges and simply put, to receive a new status of a legal market entity. The ETFs play as securities of the asset they are based on, in this case, the Bitcoin. But it seems the U.S. regulations are not ready to open the financial market to the crypto funds.
Proposals about Bitcoin ETF are submitted and rejected by the Securities and Exchange Commission (SEC) since 2014. Latest events, that occurred this year include a proposal by Cameron and Tyler Winklevoss, founders of the cryptocurrency exchange Gemini, which expressed a wish to trade Bitcoin ETFs on the New York Stock Exchange and the Chicago Board Options Exchange. The SEC rejected the proposal in June due to a disagreement with the Winklevoss twins' statement that the Bitcoins markets are “uniquely resistant to manipulation”, CNBC reported earlier in the summer. This was the second Winklevoss proposal but the SEC keeps looking reluctant to make any changes in the existing regulations. The main argument is that the cryptocurrency market is still too vulnerable to frauds and insecure for investors’ funds.
On July 20th Van Eck submitted a letter regarding the concern of the futures of Bitcoin ETFs. It was written by Jan Van Eck, president, and CEO, and Gabor Gurbacs, digital assets strategist.
[…] we believe that our proposed ETF will operate consistent with the rules and requirements of the 1940 Act. Further, by offering investors exposure to bitcoin through a regulated investment product, we believe the proposed ETF will be consistent with the Commission's mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
The document reads. But the SEC did not agree again.
Furthermore, a new letter was sent to the SEC on 28th of August with quite similar requests to change the legal status of the cryptocurrencies, increase its liquidity rates and make the trading process transparent and regulated. It is written by Malcolm Rose, a cryptocurrency blogger, and vlogger. The conclusion ends emotionally:
Bitcoin is complicated but undeniably important. I encourage the commission to learn as much as they can about it. Remember that cryptocurrencies are a brand-new asset which, if regulated properly, are likely to enrich our country and our markets in the long term. You are in a uniquely powerful position to make a choice that could help to put America at the forefront of one of the most crucial technological developments of the 21st century. I urge each and every one of you to make the right choice: take us into the future, SEC!
Despite all the struggle to introduce a Bitcoin ETF to the financial market, SEC remains definitive about its position for the moment. Official acceptation of the cryptos does not seem to be hidden in the near future.
Despite today's ruling, we look forward to continuing to work with the SEC and remain deeply committed to bringing a regulated bitcoin ETF to market and building the future of money,
Said Cameron Winklevoss in front of CNBC showing ambition to not let go the mission of Bitcoin ETFs.
According to crypto experts, the stabilization and the lower volatility would only help SEC to reach the decision of approving the coin’s ETF. But when exactly could that happen, we can only wait and see.