[ad_1]
On July 26, the US Securities and Exchange Commission (SEC) demolished the demand for a fund traded on the Bitcoin exchange (ETF) run by the brothers Tyler and Cameron Winklevoss. While the market has taken the news negatively and the price of BTC has crumbled – even if it has returned to green within 24 hours – the case of the ETF is far from being closed: as soon as September, the SEC will face another wave of similar proposals from a number of actors.
What is an ETF (and a Bitcoin ETF)?
Cointelegraph has previously covered the nature of ETFs in a separate article. In short, an ETF is a type of investment fund that is linked to the price of an underlying asset – a commodity, an index, bonds or a basket of assets – as an indexed fund and is traded on an exchange, available for sale retail and institutional investors.
A Bitcoin ETF, in turn, tracks Bitcoin (BTC) as an underlying asset. It is an indirect way of buying BTC, in which the investor holds the corresponding security without having to deposit the actual coins. One of the key aspects of a Bitcoin ETF is that, if listed in a regulated exchange in the US, it could pave the way for big traditional investors, potentially pushing Bitcoin towards mass adoption and wider recognition on Wall Street. .
The namesake fund of the Winklevoss twins, the Winklevoss Bitcoin Trust, was presented to the SEC to be listed on Bats BZX Exchange (BZX) as COIN, an ETF "able to track the price of Bitcoin because its only asset will be Bitcoin," As for your website. The shares of COIN would represent the fractional ownership of the total Bitcoin holdings of the fund.
The Winklevoss ETF failed for the second time
The SEC explained its decision in a 92-page report published Thursday. In essence, the agency was not convinced in Winklevoss's request that the Bitcoin markets were "inherently resistant to manipulation". The refusal document said:
"The arguments presented in support of this statement are incomplete and inconsistent and are not supported or contradicted by the data."
The Winklevoss twins have been nurturing the idea of a Bitcoin ETF for some time – they initially tried to register their fund with the SEC in 2013. It took four years for the watchdog to take a decision: in March 2017, the agency denied the application based on concerns "that significant markets for Bitcoin are not regulated". The Winklevoss side then quickly submitted a petition requesting a review of the Disapproval Commission, which the SEC ultimately granted – technically, the agency's recent decision is a response to this petition.
However, this does not necessarily mean that the SEC will continue to take a rigid approach in the future – after all, Thursday's decision was not unanimous, as the refusal came after a 3-1 vote.
Immediately after the hearing, the declaration of official dissent by SEC Commissioner Hester M. Peirce was published. In it, he stated that the agency's move "sends a strong signal that innovation is not welcome in our markets, a signal that could have effects far beyond the fate of Bitcoin ETPs. [Exchange Traded Products]. "Therefore, the main dilemma related to Bitcoin ETFs revolves around the role of the SEC in the market, while the agency pointed out that their refusal did not try to assess whether cryptocurrency or blockchain technology"[have] usefulness or value as innovation or investment ", this is exactly what Commissioner Peirce considered to be the final decision.In his speech, he stated that the agency exceeded" its limited role "because it focused on the nature of the underlying Bitcoin market instead of the derivative itself:
"The Commission erroneously reads[…] the [Securities Exchange] Law, which requires[…] that the rules of a national stock exchange are "designed to prevent fraudulent and manipulative acts and practices …" [It] focuses its decision not on the ETP shares to be quoted […] but on the underlying Bitcoin spot market[…] [instead of] the capacity of BZX[…] monitor trading and discourage the manipulation of ETP shares listed and traded on BZX. "
The market has heard the skepticism of the SEC
The SEC decision promoted a downtrend in the market, as the price of BTC fell 3.6% to about $ 7.850 shortly after the news, although it was quick to recover in the green to trade around family members $ 8200 at the print time.
Other ETFs must be examined by the SEC
The Winklevoss brothers are not the only ones trying to open cryptography-based ETFs in the United States. In January 2018, there were at least 14 "different Bitcoin ETFs or related products" pending with the SEC, according to Reuters data. However, all were soon withdrawn at the request of the SEC, citing the agency's concerns regarding "liquidity and valuation". However, those were not necessarily the same identical product. For example, while the Winklevoss Fund hoped to make direct investments in Bitcoin, a number of other funds focused on Bitcoin futures contracts. Given that they were listed on the main regulated stock exchanges in the United States as CBOE Global Markets and CME (pushing the price of BTC to rise when launched in December 2017), they appear to provide a more stable ETF basis than the virtual currency spot market for self, which has yet to be clearly highlighted by US regulators.
The ETF closest to the SEC overview is the Bitcoin ETF of the investment company VanEck and the SolidX financial services company, which applied to the SEC in June, as per the press release. Both companies have already tried to register separate ETFs but have not found any luck. They hope to list the new ETF on Cboe BZX Equities Exchange. What distinguishes it primarily from the Winklevoss approach is insurance: the VanEck SolidX fund is physically supported – which means they will actually hold BTC – and companies reassure that this will protect against the loss or theft of cryptocurrency . According to their filing with the SEC, each share of VanEck SolidX Bitcoin Trust would cost as much as $ 200,000. As SolidX CEO Daniel H. Gallancy explained to CNBC, the price is set at a higher rate to focus on institutional investors. According to reports, the SEC received over 100 comments from various economists, CEOs, financial analysts, etc. At your request and could be reviewed as soon as September. In addition, there are more ETF applications to be examined by the SEC, such as that of Direxion, which has been postponed by the agency until mid-September.
Bitcoin on Nordic Nasdaq: Swedish experience
While the SEC and the funds are fighting on ETFs in the United States, the Swedish company XBT Providers has successfully managed a Bitcoin-listed product called CoinShares. It is accessible to European investors in several countries and since 2015 has managed to attract more than $ 1 billion when it was listed on the Stockholm Nasdaq, a large Swedish stock exchange.
The CoinShares series includes XBT Bitcoin Tracker One (COINXBT) and XBT Bitcoin Tracker Euro (COINXBE), which trade respectively in Swedish krona and in euros. Several versions of the XBT have also been presented in Denmark, Finland, Estonia and Latvia.
One of XBT's first big investors is the billionaire investor Mark Cuban, who described his experience at the Vanity Fair New Establishment Summit in Los Angeles:
"It's interesting because there are many goods whose value is based only on demand and supply. [With] most of the shares, there is no intrinsic value because they do not have ownership rights and voting rights. You only have the opportunity to buy and sell those securities. Bitcoin is the same thing. Its value is based on the supply-demand. I bought some through an ETN based on a Swedish exchange ".
Space for optimism
The fact that the market was quickly recovered after the second failure of Winklevoss to convince the SEC suggests that investors remain confident that Bitcoin ETFs will gain regulated trading in the United States. The dissent of SEC Commissioner Hester M. Peirce seems to further fuel this conviction, having served as a silver lining to the watch dog's verdict.
Meanwhile, some industry players share their confident beliefs about the future of ETFs: on July 29, Kin-Wai Lau, CEO of Fatfish Internet Group – a global venture technology investment firm – told CNBC that global markets will be "ready to accept" A Bitcoin ETF in just a couple of months ".
"I think we're not far away, I think it's probably just a couple of months before we're ready for the market to accept an ETF in general."
[ad_2]Source link
