Bitcoin ETF’s have been the talk of the crypto town for a long time now. Looks like the same issues have persisted and the regulators have not budged on these issues. Concerns about market manipulation and illicit activities have seen attempts to be addressed, but not to a high enough standard.
The Crypto industry has been trying to make Bitcoin ETF a reality since 2017 when the Winklevoss Twins tried to get a fund off the ground alongside applications by GraniteShares, ProShares and Direxion. Each one of them has been turned down with the regulatory body open and clear about its concerns, claiming that the markets were too volatile and manipulative and it would be difficult to implement regulations for an ETF based on Bitcoin.
Since then the ETF torch has been carried on by Bitwise Asset Management, the crypto index fund provider. They have been trying to apply for a Bitcoin ETF to the SEC since January. The SEC had called for more time and had spouted the same reason for not allowing a Bitcoin-based ETF.
Bitwise’s ETF application was barred by the SEC as it pinned NYSE Arca as the problem for Bitwise’s ETF application. The SEC deemed that the proposal filed by the parties did not comply with legal requirements that would prevent market manipulation or any illegal activities.
However, later reports revealed that The SEC reconsidered the filing from the aforementioned parties for another review following the previous rejection. The SEC stated:
“Accordingly, it is ordered, pursuant to Commission Rule of Practice 431, that by December 18, 2019, any party or other person may file a statement in support of, or in opposition to, the action made pursuant to delegated authority.
It is further ordered that the order disapproving proposed rule change SR-NYSEArca-2019-01 shall remain in effect pending the Commission’s review.”
While there hasn’t been any word from the SEC, Bitwise on Wednesday wrote a new letter to the U.S. Securities and Exchange Commission, assuring that it is “committed” to creating a bitcoin ETF.
The letter aims to address the various concerns that the SEC has regarding a Bitcoin ETF and is framed by Bitwise’s executive team – Hunter Horsley (CEO), Hong Kim (CTO), Teddy Fusaro (COO) and Matt Hougan (global head of research). The letter claims that a Bitcoin ETF is necessary to enable investors to “safely and efficiently” access the crypto market.
Bitwise also highlighted the fact that market manipulation isn’t restricted just to the crypto market, they added that the Bitcoin market is “uniquely resistant” because Bitcoin’s price is set in the open market.
“While our research argued that the bitcoin market is uniquely resistant to certain forms of manipulation, the Order made it clear that the market would need to be uniquely resistant to a comprehensive set of market manipulation vectors to qualify. This is a standard that, historically, even the most well-regulated, arbitraged, and liquid markets, such as the U.S. equity index options market, have not met.”
Discussing NYSE Arca and the requirement of surveillance sharing, bitwise said:
“In the research we submitted in support of NYSE Arca’s application, we argued that the CME bitcoin futures market is a regulated market of significant size, and noted that NYSE Arca has a surveillance sharing agreement in place with CME through its participation in the Intermarket Surveillance Group.”
Recent events have also sparked optimism within the community as a recent filing published on and dated Dec. 2 states that the New York Digital Investment Group (NYDIG) has procured a green light from the SEC to launch the NYDIG Bitcoin Strategy Fund, a portfolio fund in the Stone Ridge Trust Vl.
A research note from Bloomberg commodities strategist Mike McGlone even states that this approval improves the “odds of a Bitcoin ETF in 2020 to 50-50.”
The start of a Bitcoin ETF would further promote engagement involving a wide range of investors who are not directly involved with the crypto industry. Cryptocurrencies are not in the shadows anymore and investor interest in Bitcoin is on the rise, this would be a perfect time if a Bitcoin ETF was to be launched.