A Bitcoin ETF is an Exchange-traded fund that performance of the world’s largest cryptocurrency. Crypto ETFs would allow investors to diversify their portfolio without actually owning the asset that is being tracked.
Bitcoin being the cryptocurrency with the highest market capitalization and completely decentralized, the U.S Securities and Exchange Commission is hesitant of allowing an ETF that is focused on this rouge digital asset.
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. Bitcoins wasn’t much of a popular investment at that time and they weren’t successful in their efforts. The SEC back then claimed that the markets were too volatile and manipulative and it would be difficult to implement regulations for an ETF based on Bitcoin.
In recent times, Bitwise Asset Management, the crypto index fund provider has 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.
The excepted call was set for late October, but it was no surprise when the SEC barred Bitwise’s application. The SEC deemed that the proposal filed by Bitwise Asset Management in conjunction with NYSE Arca, did not comply with legal requirements that would prevent market manipulation or any illegal activities.
The SEC this time directed their concerns towards NYSE Arca, stating:
“The Commission is disapproving this proposed rule change because, as discussed below, NYSE Arca has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices.’”
A few weeks later, The SEC is having second thoughts and has announced on November 18 that it will consider 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.”
As per Matt Hougan, the company’s global head of research the decision to review came from the SEC. He further said:
“We do, however, welcome the opportunity to submit comments and continue the dialogue with the SEC.”
It is hard to understand if the SEC is considering accepting the proposal, but if it does, this will go down in the history as the first American Bitcoin ETF. The order rejecting the proposal will still remain active until the review has been conducted. However, it’s just a matter of time before we know if we’ll finally be able see a Bitcoin ETF in this decade unless the SEC takes another year to come up with a conclusion.