Investment firm, VanEck teamed up with SolidX, a financial service company, earlier this year in a bid to launch an ETF that is backed by actual bitcoins rather than futures. An ETF is a financial product that tracks the price of an asset and is listed on an exchange. It means that investors don’t actually have to buy the underlying asset.
U.S. Securities and Exchange Commission (SEC) delayed its decision on a proposed bitcoin exchange-traded fund (ETF). The approval of the proposal would have meant the creation of a one of it’s kind financial product. Making ETF’s and cryptocurrencies more legitimate than status quo. The news of delay immediately translated into a fall in the price of bitcoin. Value fell throughout cryptocurrency markets, as a result.
Bitcoin was down around 8 percent from 24 hours ago at 10.53 a.m. London time, trading at just over $6,500. It’s value had fallen over $9 billion.
ETF’s are created as a neutral and safer option for institutional investors to get into cryptocurrency. Their investments are made safer in a way that makes it preferable over buying bitcoin on a crypto-asset exchange.
This proposal was a an attempt to get ETF’s the status it needs to become a widely used single most dominant investment solution for cryptocurrency. The ETF was proposed by VanEck and SolidX. This time marks the third attempt of VanEck to push a bitcoin ETF through. The SEC has remained unmoved at each attempt. This time moving it ahead for an definite amount of time that is till the 30th of September 2018.
Founded in 1955, VanEck is an investment management firm headquartered in New York, NY and having satellite offices in Frankfurt, Germany and Australia. It offers creative ETF options and is keen on adopting new and improved disruptive technologies that help it further in its cause of financial development. In January, VanEck withdrew a filing for an ETF based on bitcoin futures, after shelving an application for a similar ETF in September.
SolidX provides Certainity-as-a-Service (CaaS). CaaS is often superior to the relative confidence provided by centralized databases. It adds to the safety layers on blockchain. Making it a better alternative to other technologies that try to do the same loosely. CaaS creates digital signatures or hashes that lead to a great deal of protection from defaulting the system or even worse hacking it. This prevents manipulation, tampering and wreckage of data.
SolidX has also previously struggled to launch a bitcoin ETF. In March 2017, the SEC rejected the company’s application for an exchange-traded product based on physical bitcoins.
Bitcoin is largest cryptocurrency in terms of market capitalization. It was picking momentum after a sharp fall in December 2017. The momentum meant it could have touched $100,000 if growth remained consistent. However, SEC has inflicted serious damage over various issues, that have cauterized its growth.
Bitcoin’s share of the entire cryptocurrency market is at its highest level this year, and is near where it was when the digital coin hit its highest price level in history. The values of cryptocurrency are as sensitive as fiat currencies. The effect of news from influencers such as the SEC itself, are overbearing on the values of crypto coins. Michael Novogratz predicted that bitcoin could reach $40,000 by the end of next year.
Mark Newton, managing member at Newton Advisors, said on the matter:
I truly don’t think people are involved on a mass scale yet. We’ve heard the fraud claims. Now we need people profiting immensely all around us and making forecasts for $1 million, etc., for it to truly have reached a euphoric peak
A whole ecosystem is waiting for a big bang to help push digital currency as a legitimate asset class. If done rightly, bitcoin will quickly secure itself as the single most successful and popular crypto choice.
There are a number of applications underway to get a bitcoin ETF listed, despite the eagerness of the industry the SEC is taking things slow. A second attempt by Cameron and Tyler Winklevoss, founders of crypto exchange Gemini, to list their ETF was also recently rejected by the SEC.