As a veteran of Wall Street, I was not surprised by the SEC announcement on Thursday on ETF VanEck-SolidX Bitcoin. Once again they gave a "no decision". This reports the deadline to December 29, 2018. Do not be surprised if the last year comes and goes and nothing happens before the SEC is forced to participate in an action by the end of February.
Again in August, when the first delay was announced, the reaction of the encrypted investors was quick and painful. On Thursday, after a temporary hiccup, prices took a surprisingly positive turn. If we have to believe for a moment that cryptographic prices act rationally (or only occasionally), then there are two obvious questions: are cryptographic ETFs good or bad? Secondly, why the SEC can not find an answer?
Never Say Yes
Let's start with the simple question: what happens to the SEC? Having dealt with this Teflon organization for over 30 years, their actions towards VanEck-SolidX are the same as they have always followed. Virtually never approve anything. Instead they provide two choices: rejection or delay. By delaying the VanEck-SolidX application, they accept in principle the concept of the ETF, but they expose objections that need to be corrected.
The result of this song and dance legislation, do not expect a decision until the last minute. The reason is that the main problems will probably not be solved in time. In fact, I doubt that the proposal of the ETF obtains the approval perhaps for another year. Here because.
SEC Speak: Obfuscation
According to Jake Chervinsky, lawyer for VanEck, the SEC asks "18 questions on multiple parts for seven pages." He adds: "It is not encouraging to see the SEC ask if the bitcoin futures markets are" significant in size "despite having already concluded last month that they are not."
This is a tactic of obfuscation that the SEC loves when an applicant did not provide an appropriate answer. In this case there is no objective answer to how liquid a market should be in order to reach the measure of meaning. Furthermore, there is little or nothing that can be done in the short run to create more liquidity.
The SEC is a political body as much as any agency of the federal government. In raising the issue of liquidity, they can support their role of public protection without hindering public access to a class of assets, even at current depressed levels, at about $ 200 billion.
The SEC has reason for their delays
Does the cryptic world really benefit, as this stage of its evolution, by promoting a group of ETFs? The argument in favor states that this is the way to offer the individual investor a simple and secure way to participate in a diversified crypto portfolio. It seems noble – or is it just something that makes a lot of money to those who create them?
But so far, at least from the point of view of the SEC, candidates for the ETF have not created a safer domain. More importantly, even if it were not so, what does the investor gain by investing in a diversified list of crypts when Bitcoin overshadows any other altcoin?
Without anything against those who believe in the benefits of ETFs, the benefits in the current terms are far better for the sponsor of the ETF who is for the investor.
Looking only at mathematical calculations, an individual investor could be just as good with the purchase of Bitcoin, Bitcoin Cash, Ripple, Ethereum and EOS. Of course, it is a little more complicated to find a place to buy and store Ripple, but with this small portfolio, 75% of the entire crypto asset class is covered. If security is a problem just go to blockgeeks.com/cryptocurrency-safe/ and select from a list of hardware portfolios.
So if the SEC gives its approval of VanEck-SolidX in December or February it could make a difference if it were 2020 or a few hours later. For now, it's actually not critical to mass acceptance of crypto.
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