Equity Market Expert Points Out 3-Key Flaws in the SEC’s ETF Rejection Analysis
The US Security and Exchange Commission has rejected all the applications for the Bitcoin-based Exchange Traded Fund (ETF). The latest one being Bitwise and NYSE Acra, whose application was rejected, but SEC also gave an explanation on why they rejected their application. The SEC believes that the crypto market is not mature enough to have its own ETF, which might lead to market manipulation.
The SEC wrote that the proposed application by Bitwise did not meet the requirements of a section of the Exchange Act, which demands national securities exchange to “prevent fraudulent and manipulative acts and practices.”
Now, David Weisberger, co-founder, and CEO of CoinRoutes has pointed out three key mistakes in the SEC's response to their rejection.
He claimed that SEC's evaluation is flawed as there are several self-proclaimed exchanges that meet the money center or trust bank regulation standards set by regulatory bodies that provide sufficient liquidity for the price discovery. He went on to claim that contrary to the SEC's argument, there has been no fake and non-economic activity.
Comparing Bitcoin with assets like Gold and Silver which already have an ETF, Weisberger believes Bitcoin is way more transparent in terms of its market value than these precious metals whose spot prices are fixed on a negotiated basis with a bid-ask spread of over 4%. On the contrary, Bitcoin has a bid-ask spread of less than 1%.
The accusation that the price of Bitcoin can be manipulated also does not hold much ground when compared to traditional assets as it was evident from the recent surfacing of the RICO case where precious metal traders were found to be doing the same.
The points made by Weisberger for sure make a lot of sense, but Tom Lee another well-known personality believes otherwise as he believes the SEC was right in its decision to reject a Bitcoin ETF at this point. Lee has pointed out that the liquidity of the crypto market is too low to handle the demand for an ETF, and Bitcoin would need to be 100x bigger than its current value to be able to handle that demand.