ETF, which is an abbreviation for Exchange-Traded Fund, is a fund that is traded on a stock market. ETF work just like investment funds which enables the public easy access to an index or artefact giving investors the same profit as other major markets do. Hence the ETF stocks are the most popular ones among users of the stock exchange owing to their ease in investing in industries without paying any charges to the fund manager. However before getting a hold of an ETF it is important to see what is incorporated in the fund. At the start of 2018 it was reported that the United States Securities and Exchange Commission (SEC) was working on the idea of developing a Bitcoin related ETF. This would make a Bitcoin-ETF an investment tool that would utilize Bitcoin as the primary asset for investments. The main purpose of an ETF is to ease the investment process for cryptocurrency investors and make it more accessible to the community.
However in a recent turn of events a commissioner of the United States Securities and Exchange Commission (SEC) suggested that the public and concerned parties should not eagerly wait for a Bitcoin Exchange-Traded Fund (ETF) using the words ‘not to hold your breath’ at the Digital Asset Investment Forum held in Washington D.C. on December 5.
The United States Securities and Exchange Commission (SEC) has broadened the proposal for rule change allowing the first Bitcoin Exchange-Traded Fund (ETF), shifting the deadline of the deadline for next year.
The proposal for rule change was first presented by money manager VanEck and SolidX, a blockchain startup, who got associated with Cboe exchange in 2018. According to a notice released online, the securities regulator stated that the SEC was extending the period for reviewing the proposal of the ETF to February 27, 2019. According to the SEC rules the decision regarding the proposal cannot be extended any further, which means that the next notice must either approve the Bitcoin Exchange-Traded Fund or reject it.
Hester Peirce, who is also known as ‘Crypto Mom’ by the community for her disagreement with the Securities and Exchange Commission’s (SEC) decision to dismiss a Bitcoin Exchange Traded Fund presented by Cameron and Tyler Winklevoss, stated that a crypto or Bitcoin related ETF was certainly possible but it could take years to get implemented. She said:
Definitely possible could be 20 years from now or it could be tomorrow. Don’t hold your breath. The SEC took a long time to [establish] Finhub. It might take even longer to approve an exchange traded product.
Pierce also pointed out that she was trying to persuade her colleagues to broaden up their mindsets in order to better adopt the potential of cryptocurrency but that it would take a lot of time and convincing. While talking about the possibility of Bitcoin application in institutions, Pierce said that the SEC considered a lot of institutional and retail interests and would engage with it through multiple options. She also stated:
I think we need to encourage institutionalization in crypto space. […] And the best way that we can offer retail investors to get into this space is through a place that’s more institutionalized.
When questioned about the recent SEC regulations she added that the public would have to adhere to the policies and laws, but the government is required to figure out if the regulation is inhibiting the public from coming up with new and innovative ideas.
Hence in order to mitigate the SEC’s troubles regarding Exchange-Traded Funds, several ETFs are setting their values at a level that investors can afford. A minimum purchase of VanEck’s proposed Bitcoin ETF is set at 25 Bitcoins accordingly. The Securities and Exchange Commission will likely view how the Bitcoin ETF works for institutional investors before allowing its access to retail investors.