For some reason the entire crypto world desperately wants the US Securities and Exchange Commission (SEC) to approve a Bitcoin ETF. The desperation can be seen in the fact that time the SEC issues negative news about a BTC ETF, the price of Bitcoin slides even further. During mid-2018, the SEC declined nine applications for BTC ETFs, leaving the fate of the crypto world resting on VanEck and SolidX’s shoulders. However, due to a government shutdown, VanEck, SolidX and CBOE withdrew their application and refiled a few days later.
In an interview with Congressional Quarterly, SEC Commissioner Robert J. Jackson Jr was quoted saying that he believes a BTC ETF is likely to be approved sooner rather than later. While this doesn’t give us all the exact date we’ve been waiting for, the prospect of a BTC ETF should cheer up many in the crypto world and help the price of Bitcoin return to form.
Entering a New Asset Class
An ETF is a financial instrument traded on stock exchanges that gives holders exposure to a specific market – usually intangible assets such as oil, oranges, wheat, coal, and gas. While Bitcoin isn’t intangible as such, investors wouldn’t actually be buying Bitcoin, they would be buying an asset directly linked to the price of Bitcoin. This means that people who hold a Bitcoin ETF in their investment portfolio only have exposure to crypto markets and cannot use the Bitcoin they “hold” as a payment method or to set up Lightning Network nodes. The Proof of Keys movement would be truly horrified by a Bitcoin ETF.
Keeping Americans Safe
Jackson did go into some detail about why the SEC keeps declining applications, and the reason is less Machiavellian than most in the crypto world would believe – he simply wants to keep Americans safe. By holding ETF providers to the highest standards keeps investors safe from scammers and market manipulators looking to make a quick buck while legitimate traders get burnt. In the interview, Jackson said:
Getting the stamp of approval from the deepest and most liquid capital markets in the world is hard, and it should be. Once we make it available to everyday mom and pop investors, we are taking risks that Americans can get hurt.
So far, all Bitcoin ETF applications have been declined on the grounds of being too susceptible to market manipulation. Until a provider manages to crack this, it’s unlikely the SEC will approve an ETF. It could be some time before a provider does satisfy the SEC, but it does appear the huge steps are being taken to make this a reality. In the interview with Congressional Quarterly, Jackson said,
Eventually, do I think someone will satisfy the standards that we’ve laid out there? I hope so, yes, and I think so.