The establishment of a crypto-linked exchange traded-fund (ETF) has been the talk of the town for quite some time now. The major drive behind this being the institutional push. With some speculating its establishment in the near future, Craig S Wright, a well-renowned Australian computer scientist and businessman, is of the view that a bitcoin ETF isn’t coming anytime soon.
Talking to BlockPublisher, Craig stated that:
ETFs will come when there is something to offer. BTC has nothing to offer. BCH has a LONG way to make a mark and be cash, but it is on that path
Craig is of the view that bitcoin first needs to be stable and managed in the country before getting an exchange traded-fund. The entire cryptocurrency market is rife with instability. As per bitcoin, it was never above the law and will never will be. As bitcoin does not have much to offer in terms of value on an institutional level due to market instablility and volatility, a crypto-linked exchange traded-fund does not seem in sight as of yet.
In a tweet, he stated that:
Bitcoin is not and never will be above the law – and it is IDIOTs who even contemplate this.
Bitcoin does not end the government nor banks and nor was it designed to
It makes them honest – this is what transparency is about.
— Dr Craig S Wright (@ProfFaustus) August 28, 2018
These comments are seen in the hindsight of all the rejections that the United Nations Securities and Exchange Commission (SEC) is putting in front of all the proposals presented to it concerning the establishment of crypto-linked ETFs. The major reason behind these rejections being the massive amount of manipulation and fraudulent activities prevalent in the crypto world as of now. In the rejection presented to the proposal made by the Winklevoss twins to the SEC, which was also backed by Bats BZX, the regulatory body stated that:
Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin or blockchain technology more generally has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because as discussed in detail below, BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.
Concerns regarding valuation, liquidity, custody, arbitrage and potential manipulation and other risks associated with the crypto market are also presented forward by the regulatory body. Particularly concerning manipulation, the SEC stated that:
The Commission has also discussed concerns relating to the risk of fraud and manipulation in cryptocurrency markets in orders denying exchange proposals to list the shares of commodity trusts that would hold cryptocurrency. In addition, a number of recent media reports have highlighted a range of possible vectors for potential manipulation of cryptocurrency markets. Although some funds may propose to hold cryptocurrency-related products, rather than cryptocurrencies, the pricing, volatility and resiliency of these derivative markets generally would be expected to be strongly influenced by the underlying markets.
So, all in all, unless these concerns regarding the crypto markets are not resolved, the establishment of a bitcoin ETF seems unlikely. Also as suggested by the Craig S Wirght, unless bitcoin as something to offer, it is not going to get an ETF.