Could The VanECK Bitcoin ETF Proposal Address All The Concerns Raised By The SEC?
The United States Securities and Exchange Commission (SEC) could soon approve the first Bitcoin Exchange-Traded Fund (ETF). However, this is something that has been debated and discussed in the past. The regulatory agency has been very clear about the requirements it needs from the companies presenting these ETFs.
During this week, the SEC Chairman Jay Clayton said that the SEC needs to have a market that is completely free of manipulation. He said that at a conference in New York.
On the matter, Clayton commented:
“What investors expect is that the trading in that commodity that’s underlying the ETF is trading that makes sense, is free from the risk or significant risk of manipulation. Those kinds of safeguards don’t exist in many of the markets where digital currencies trade.”
At the moment, most of the crypto exchanges did not make enough progress to eliminate the risk of manipulation, which is making an approval of a Bitcoin ETF highly unlikely. Back in July, the Bitcoin ETF filing presented by the Winklevoss twins was rejected by the regulatory agency in the United States. The SEC mentioned that the Gemini exchange, which is already one of the most regulated exchanges in the crypto world, was vulnerable to manipulation.
This is why the SEC believes that the current market infrastructure is not prepared for handling a Bitcoin ETF yet. The same happened with a futures-based ETF that was rejected by the SEC later in August. The commission considered that the futures market does not have a significant size to support the ETF.
In February 2019, the SEC would have to take a decision about a Bitcoin ETF filing that was presented by VanEck. However, the proposal is different from the one made by other companies because the price of Bitcoin is based on over-the-counter (OTC) market using a specific index.
Gabor Gurbacs, Digital Asset Director at VanEck, said that OTC trading desks tend to be more robust than exchanges, which can also increase the possibilities for the ETF to be approved. He mentioned that OTC trading desks are also more efficient and liquid.
At the moment of writing, it is not clear whether the SEC will be approving a Bitcoin ETF and whether it will be doing it in February or later in 2019. However, the cryptocurrency market is moving in this direction. Several companies are working with the intention of creating the necessary infrastructure for receiving new investments from institutional and traditional investors.
An ETF could also help the market recover part of the value they lost during this year. It is currently time to wait for a decision from the SEC.