Despite the growing demand, the crypto world has not seen a bitcoin exchange-traded fund (ETF) as of now. The regulatory body in charge of approving a crypto-linked ETF, the United States Securities & Exchange Commission (SEC), has not yet approved it owing to the severe issues that are linked with this world in the form manipulation, lack of regulation, liquidity, custody etc. Will we see a bitcoin ETF getting approved in 2019 and in case it happens, what might be the effect of this development on the market?
BlockPublisher recently got in touch with the co-founder of BelcoBTM, Wael Mahmoud, as he expressed his insights regarding this matter. Answering both the questions, he said:
I don’t think that bitcoin ETF will be approved soon with the current lack of regulations. Few days ago CBOE-VanEck ETF got withdrawn from SEC. There are a lot of manipulations that happen in exchanges right now: wash trades, automated bots and outages, spoofing, fake volumes, overload issues and even exchange owners and employees engaging in insider trading. These manipulations made people and investors lose their life savings and made crypto look like a scam. SEC will not allow this under their watch, while crypto market remains wild west with no regulations and punishment system in place. To begin with, crypto community itself needs to create a self-regulatory structure to fight these manipulations.
Further adding on this, he said:
If we manage to do this, the investors will start trusting crypto markets and the mainstream adoption will continue with a lot of liquidity driving the bitcoin price up. This is what happened with gold, when the first gold-based ETF was introduced a few years back.
The lack of regulation has allowed many negative factors to seep into this world. Many investors have lost a large amount of money owing to the illegal activities and scams floating around in this space. Protection of the investors seems to be the highest priority of the SEC and unless regulations are there guaranteeing transparent and trustworthy workflows, we might not see an ETF getting established any time soon.
Manipulation is also an issues to look out for. Since the overall market capitalization of this space is very small as compared to the banks and institutions, big whales present in the market highly manipulate the prices of the digital assets. Before we see a crypto-linked ETF get approved, the crypto world needs to solve these innate problems as soon as possible.