Taking Another Look at Bitcoin ETFs
The rollercoaster ride of the Bitcoin exchange-traded fund (ETF) saga continues! The United States Securities and Exchange Commission (SEC) has decided to dust off the filing from Bitwise Asset Management and NYSE Arca, which was previously sent packing. On November 18, the commission announced that it would be taking a second look at the rejected proposal, leaving cryptocurrency enthusiasts on the edge of their seats.
A Brief Recap of the Rejection
For those who might have missed it, the SEC initially rejected the Bitcoin ETF proposal because the applicants failed to meet the necessary requirements. Back in October, the regulators stated that there were serious concerns about possible market manipulation and illicit activities. In their disapproving letter, they pointed out that:
“The Commission is disapproving this proposed rule change because… the rules must be designed to prevent fraudulent and manipulative acts and practices.”
Market Manipulation: The SEC’s Wild Card
Market manipulation concerns often loom large in the SEC’s evaluation of commodity-based ETFs. The rejected proposal raised further doubts over whether the underlying Bitcoin market is robust enough to resist manipulation. The commission wasn’t convinced that the so-called “real” spot market for Bitcoin could stand tall once the “fake and/or non-economic data” is wiped away. In layman’s terms, they weren’t buying what Bitwise was selling.
The Road to Resubmission
For those looking to have their voices heard, the SEC has opened the door for statements of support or opposition to be filed by December 18, 2019. However, they did make it clear that the earlier disapproval order remains in effect as they turn the wheels of justice (or bureaucracy, if you will) on the review process.
Is the Crypto ETF Approval Timeline in Sight?
Charles Lu, the CEO of Findora, doesn’t seem optimistic when it comes to timelines for the first-ever crypto ETF approval. He’s convinced that in order to win over the SEC, proponents of a Bitcoin ETF must demonstrate that genuine price discovery is in play, rather than mere market manipulation.
Lu suspects that the SEC will look for surveillance-sharing agreements with significant cryptocurrency exchanges — and let’s face it, this is a requirement that few overseas exchanges are likely to agree to. So, for now, the crypto community might need to gather some extra patience, possibly investing in a stress ball or two.
A Tepid Optimism from Industry Professionals
Despite the clouds of skepticism, there remains a flicker of hope among industry insiders. They believe that one day the crypto industry will finally snag the elusive ETF approval. However, they also acknowledge that it won’t be happening overnight.
So, buckle up, crypto advocates! The SEC’s second look at the Bitwise Bitcoin ETF filing is certainly a step in the right direction, but as always, patience (and perhaps a little bit of humor) will be necessary as we await the next twist and turn in this ever-fascinating saga.
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