At least 10 times the American SEC has rejected the proposal of Bitcoin ETFs, an investment fund which would allow small investors get through to cyber-assets. Nevertheless, such a hardline stance does not stop BTC enthusiasts as they want to be ready in case the agency changes its mind.
For now, there is minimum one Bitcoin ETF application under consideration and more planned included ETF from digital-asset manager Bitwise Asset Management writes Asjylyn Loder for The Wall Street Journal.
Being First Means a Lot
As Asjylyn Loder points outs, history has shown that the first registered ETF has always had a considerable advantage over its later counterparts. That is the reason why bitcoin enthusiasts are fighting so hard for their BTC ETFs to be approved by regulators.
But the pivotal question for the SEC is to decide whether to determine that cyber-coins are a gainful investment for individual investors or whether it is enough just to warn fund firms about risks related to bitcoin ETFs.
Paul Atkins, a former SEC commissioner and a current top exec of Patomak Global Partners, a financial consulting firm, says it will take a long time before the following dilemma is solved:
“Is [the SEC] a merit regulator, or should investors be able to decide for themselves what to invest in?”
SEC’s Cautious About Risks
It is also argued that the SEC is biased towards cryptos and is holding a harder stance on bitcoin ETF’s than on other investment classes.
Will Rhind, a founding father and chairman of GraniteShares Inc., one of the bitcoin ETF firms rejected newly, says trading in physical markets for oil or gold is also substantially unregulated. Nevertheless, he singled out, it did not stop the commission from giving the green light to ETFs based on them. With cryptos, the situation is a bit different, as it turns out.
“That risk has always been a disclosure issue. But in this case, we had to go way beyond that and prove that the market is not being manipulated, which is a standard that is impossible to prove,” concluded Rhind.
Last year December bitcoin surged up to $20,000 but since then never came back to the same pick, dropping and swinging between the margins of $6,000 and $8,000. Its volatility and risks related to speculation around it might be the main reason why SEC keeps rejecting BTC ETFs.
ETFs themselves have popularized speculation on commodity futures bound to stock-market volatility, Asjylyn Loder writes. Some of them make use of leverage to maximize gains and losses two- or even threefold. Because of this, many investors have never realized risks related to this, whereas surprising losses led to Congressional hearings, lawsuits and multimillion-dollar fines.
Therefore, it might be clear why the American securities watchdog is being so cautious with volatile bitcoin. In September, the SEC pro tempore ceased trading of two Stockholm-listed cyber-money ETPs that had started functioning in American over-the-counter markets.
One of the most known bitcoin ETF obstructions is the case of denial against Cameron and Tyler Winklevoss proposals. The Internet entrepreneurs filed their first bitcoin ETF five years ago and since then have been rejected many times. The last time when the SEC said no to them was in July this year.