Making the Case for SEC Bitcoin ETF Approval in 2018 or by Quarter 1 2019 at Latest
Is SEC Getting Prepared for a Bitcoin ETF in 2019?
The U.S. Securities and Exchange Commission (SEC) is one of the most important regulatory authorities in the world and in the United States. During the last months, several Bitcoin Exchange-Traded Funds (ETFs) have been rejected or postponed by the regulatory watchdog. Apparently, there is a chance for the agency to approve one of them during 2019.
The SEC Commissioner Kara Stein talked with Bloomberg about future ETFs and how the agency is working in order to analyze each of the applications made during the year. She explained that financial products such as ETFs need to fulfill different requirements established by the SEC.
For example, she said that ETF applicants have to clarify how they will have accurate Bitcoin prices during periods of high volatility in the market. Cryptocurrencies are very volatile assets and Bitcoin is able to fluctuate as much as 20 percent in just a few days. At the same time, companies should also provide information about their custody services to secure their assets.
She then said that liquidity should always be provided, even when there are high amounts of volume traded. This would allow investors to have the asset at any given time.
If all these requirements are met by an ETF, then, this financial instrument could be approved by the SEC.
These things marked by Stein are not so easy to be achieved by Bitcoin and market participants. Currently, there are just a few companies offering crypto-custody services. At the same time, the liquidity in the market is generally low in order to meet institutional demand with large orders.
However, the SEC is also working in order for companies to be compliant with the current rules and obligations. The agency has announced a special division known as FinHub hat aims at helping AI and fintech startups. The new special division will also be providing information to ICOs and investors in the crypto market.
Another thing that is worth to mention is that the Intercontinental Exchange (ICE) is going to release a cryptocurrency platform known as Bakkt. At the same time, it will be launching physically settled daily Bitcoin futures in December 2018. As the platform will offer Bitcoin settled futures, the market will react in a different way compared to the CME and CBOE Bitcoin futures.
Bakkt will also be deploying a very safe custody service that aims at safeguarding users and investors’ assets. Since the ICE is a very important exchange all over the world, the size of the regulated trading market will allow the SEC to change, or at least re-think, its position on the crypto market.
The SEC seems to have a positive approach to Bitcoin, and the Bakkt platform will be solving some of the main problems faced by the market. This could lead the regulatory agency to approve the first Bitcoin ETF at the beginning of the coming year.