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SEC delays Three more Bitcoin ETF Applications

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August 13, 2019 | 

Darryn Pollock |  0 Comments| 

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The SEC has stated that three more Bitcoin ETF applications made earlier this year will have to wait as the regulatory body takes its time in making a decision.  Bitwise Asset Management, VanEck/SolidX and Wilshire Phoenix filed their applications, with the former two already been delayed. 

Bitcoin ETFs have been a hot topic for some time now but the SEC is yet to make a decisive call having denied all other applications that have come across its desk. This goes back to 2017 when the Winklevoss twins made an application.

The filings were published in the Federal Register in February and June, kicking off the legally-mandated 240-day clock on a final decision, this means final decisions on the Bitwise and VanEck/SolidX proposals are expected by Oct. 13 and Oct. 18, respectively. The next decision on the Wilshire Phoenix proposal is scheduled to occur by Sept. 29.

A long history of ETF proposals

It was in 2016 that the first attempts at launching a Bitcoin ETF began as Bats BZX Exchange filed a proposed rule change with the SEC, which would have permitted it to list and trade shares of the Winklevoss Bitcoin Trust. 

The hope back then, as it still is today, was to hopefully open the doors to traditional investors as an ETF is a type of security that tracks a basket of assets proportionately represented in the fund’s shares which are used across traditional markets. 

An ETF would essentially allow for these investors to get exposure to Bitcoin, but without having to actually own it, by passing some of the sticking points for people suspicious of the cryptocurrency environment. 

Still, the SEC claimed back then that the markets were still too manipulable, volatile and resistant to surveillance. That has been its stadpoint throughout as a number of other applications have been shot down in the past. 

A better space?

While the SEC maintains that the Bitcoin market is still not ready for an ETF, these latest applications have tried to alleviate the fears of the regulators maintaining that the Bitcoin market has matured remarkably quickly. 

Bitwise, for example, has been publishing reports indicating that the actual bitcoin market is smaller, more regulated and much better surveilled than expected, and that it trades tightly with CME’s futures market.

Futures, which were launched in December 2017, have been relatively successful and have felt no ill effects of being part of the Bitcoin market despite being an institutional investment product, and this is one of the key points for an ETF.

However, there are still notable concerns in the Bitcoin market that even Bitwise agree needs cleaning up, such as wash trading, and the scourge of fake trading volumes which can heavily affect the minds of investors. 

The holy grail

Many believe that not only will BitcoinETFs open the doors to a bevy of new institutional traders and their money, it will also put a big regulatory stamp of approval on the Bitcoin market as the SEC will inadvertently put its support behind the digital currency. 

The SEC has appreciated Bitcoin's role, and has not classed it as a security, unlike many other ICOs, but that has still not been enough for the SEC to get fully involved in granting an ETF application.
 

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