Bitcoin ETF has 0% Odds of Approval for 2018 after NY AG Report Dampens Hopes Says Crypto Analyst
New York Attorney General Report Dampens Hopes of Bitcoin ETF Approval
Crypto markets are slumping this week after a scathing report from the New York Office of the Attorney General. That report identifies serious problems with a number of major cryptocurrency exchanges. The report is also dampening hopes that we’ll see a bitcoin ETF approved any time this year.
Earlier this summer, crypto analysts were reporting that there was a 99% chance of a bitcoin ETF being approved by late 2018 or early 2019. Now, analysts are claiming that the chance of bitcoin ETF approval in 2018 just dropped to 0.
One of those analysts is Alex Krüger (@Crypto_Macro). Earlier today, Krüger argued that the New York Office of the Attorney General’s report illustrates serious, pervasive problems within the cryptocurrency exchange space, including problems that the SEC has previously identified when rejecting bitcoin ETF proposals. For that reason, it seems extremely unlikely that a bitcoin ETF will be approved anytime soon:
New York attorney general’s report on crypto exchanges:
– Exchanges haven’t taken serious steps to stop manipulative trading.
– Pervasive conflicts of interest among exchanges.
– Protections for consumer funds, “are often illusory.”
=> Odds of bitcoin ETF approval in 2018 = 0. https://t.co/Eek1rdwCv8
— Alex Krüger (@krugermacro) September 18, 2018
In a follow-up tweet, Krüger clarified that he actually believes the odds are slightly better than 0:
Let's make those 2018 odds 0.1%.
— Alex Krüger 🇦🇷 (@Crypto_Macro) September 18, 2018
It’s unclear why Krüger decided to revise his prediction. Whether the odds are 0% or 0.1%, however, Krüger clearly feels like bitcoin ETF approval is extremely unlikely in 2018. Krüger’s stance mirrors that of fellow analysts. Even before the new report from the New York Attorney General’s Office, it seemed unlikely for a bitcoin ETF to be approved in 2019.
Many people, however, believe bitcoin ETF approval is inevitable in 2019.
Analysts Believe Bitcoin ETF Approval is Still Possible in 2019
Even pessimists like Krüger believe that bitcoin ETF approval is still very much a possibility in 2019.
The reason is simple: SEC Commissioners like Hester Peirce have already voiced their public support for a bitcoin ETF. Commissioner Peirce has been dubbed “CryptoMom” because of her nurturing stance towards bitcoin ETF approval. Earlier this summer, Peirce famously dissented from her colleagues when they denied the recent ETF proposal from the Winklevoss twins.
Peirce’s stance doesn’t come from a love of crypto or bitcoin. She seems ambivalent towards crypto and claims to not own any bitcoin or cryptocurrency. Instead, Peirce’s stance is one of pro-innovation: she believes that investors are always taking risks by investing, and that investors can benefit from having a regulated, secure, and efficient way of investing in bitcoin.
By approving a bitcoin ETF, the SEC would signal a willingness to embrace new, innovative investment products. Peirce argues that investor demand is clearly there – so why wouldn’t the SEC give investors a safe and regulated way to participate instead of dealing with seedy cryptocurrency exchanges?
US President Donald Trump has taken a clear stance against any type of regulation in the United States. Trump appointed Peirce as an SEC Commissioner last year. Many believe that if Trump appoints another SEC Commissioner, then the new person would also take a pro-crypto, anti-regulation stance. That could significantly increase the odds of a bitcoin ETF being approved in 2019.
The New York Attorney General’s Report Mentions the Same Problems as the SEC’s Bitcoin ETF Denials
The SEC has rejected every bitcoin ETF proposal that has come across its desk to date.
The SEC has rejected these ETFs for similar reasons, including the fact that markets can be manipulated and that cryptocurrency exchanges do not have adequate safeguards to protect users.
The New York Attorney General’s report indicates that the SEC may have been right in denying bitcoin ETFs. The report from the NY AG shows that cryptocurrency exchanges are trading on their own exchanges, providing employees with access to exclusive trading information, and engaging in other practices that put the safety of investors at risk.
In any case, the SEC needs to decide on one bitcoin ETF – the VanEck/SolidX Bitcoin Trust ETF – before September 30, 2018. The SEC can deny, approve, or delay the decision on that ETF. If they choose to delay the decision on the ETF – which seems most likely – then the ETF will be delayed until February 2019.
Will we have to wait until 2019 to see a bitcoin ETF approved? Or will the SEC shock us all by approving a bitcoin ETF in 2018?