The demands for the establishment of an exchange-traded fund (ETF) for bitcoin are at an all time high. A plethora of proposals are being presented in front of the regulatory body, the United States Securities and Exchange Commission (SEC) concerning the establishment of a crypto-linked ETF. But as of yet, the regulatory body has not been very kind regarding its approval.
A well-renowned crypto ethusiast Thomas Power, who is also the board member at 9 Spokes, The Business Cafe, Electric Dog and Digital Youth Academy is of the view that we are not going to see a crypto-linked exchange-traded fund anytime soon.
Talking to BlockPublisher, Thomas stated that the regulatory body needs time to analyze the digital asset class and it might even be 2020 before we see a crypto-linked ETF. Upon the question of seeing an ETF this year, Thomas stated:
No, this is 2019. SEC need time to analyse, consider, plan a new asset class on this kind of scale. Could even reach to 2020.
Other experts of the crypto space are suggesting similar outcomes regarding the approval of a bitcoin ETF by the regulatory body SEC. Brian Kelly, the Chief Executive Officer of BKCM suggests that the chances of a bitcoin ETF getting established in the current year are on the relatively lower side. Brian stated that:
I also hope there is an ETF. But I think the chances of a bitcoin ETF in 2018 are relatively low. There is still quite a few things. That doesn’t stop speculation on that.
After rejecting the ETF proposal made by the Winklevoss twins , the SEC also rejected proposals for ETFs put forward by GraniteShares, ProShares and Direxion. The regulatory body seems to be on the back foot regarding this approval owing to all the fraudulent and manipulative practices that are currently prevalent in the cryptocurrency world.
In January, the major concerns that the regulatory body had regarding the crypto-linked ETFs were put forward to the public. These concerns included valuation, custody, liquidity, arbitrage, potential manipulation and other risks associated with the crypto market. The regulatory body 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.
All the ETF proposals put forward to the SEC have been rejected on the basis of their inability to handle these concerns. Although a public letter was released by VanEck elaborating how the establishment of an ETF would benefit the investors of the market in the long run. Instead of exposing the investors to insecurity, an ETF would provide the investors of the market the security they need for entering the crypto market, which is also the primary goal of the regulatory body. It was stated in the letter that:
…by offering investors exposure to bitcoin through a regulated investment product, we believe the proposed ETF will be consistent with the Securities and Exchange Commission’s (the “Commission”) mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
All in all, although developments are being made for getting an ETF established as soon as possible, but as suggested by Thomas Power, we might just not see it happening this year because the regulatory body still needs time to analyse the market situation regarding the new asset class.