“I would strongly endorse the consideration of this exciting new initiative” and “it has no value as a financial product, let alone as a currency” are just two of the comments submitted to the Securities and Exchange Commission in the US for a Bitcoin ETF.
Following the latest application by VanEck and Solid X for a Bitcoin ETF, the SEC announced it is accepting the public’s comments on the verdict of the financial vehicle. Since 13 February, the SEC has posted 12 comments it has received on the rulemaking.
The verdict from the SEC has already been a lengthy wait, with VanEck and Solid X submitting the first application for a Bitcoin ETF back in June 2018. After an extension was implemented by the SEC at the end of last year, a decision had to be made by the end of February. The timeliness unfortunately conflicted with the US government shut down which included the SEC and consequentially resulted in the application being withdrawn to avoid an automatic rejection.
It did not take long for VanEck and Solid X to resubmit their application again which the SEC appears to be taking into serious consideration having opened to comments from the public. But for those which were optimistic for an approval, the comments submitted so far have not be the most encouraging.
Out of the 12 comments submitted on the SEC’s website, nine strongly disapprove the consideration of a Bitcoin ETF with the remaining three saying they cannot see why it should not be approved.
Those apposed to a Bitcoin ETF argue the intrinsic value of the cryptocurrency and whether it is even an investible asset.
One of the comments says Bitcoin is “volatile, manipulated by the very few and has no real use case.” Another submission says, “I believe that manipulation by the exchanged and custody issues are not yet satisfactorily resolved for a Bitcoin ETF approval”. The general consensus is that the cryptocurrency market remains too volatile and still runs the risk of money laundering and funding terrorist activities.
While those arguing for the approval of a Bitcoin ETF acknowledge the risks which come with cryptocurrency, they argue that “manipulation is everywhere” and every market place is going to have good and bad actors. Furthermore, another submission says, “cryptocurrencies are an exciting ecosystem that will facilitate the onset of the modern internet of money and a new era for fintech innovation.”
The SEC remains open for further comments on the decision making on the ETF.
We are no closer to a crypto ETF but there have been several crypto products come to market in the last four months. Amun has listed a number of crypto ETPs which are physically backed by the respective digital currency, including Bitcoin, Ethereum and a basket of cryptocurrencies. Solactive, a German-based index provider, has partnered with Amun to provide the ETPs’ benchmark as well as launching several other crypto indices.
Despite the variety of crypto products coming to market, besides an ETF, the approval from the SEC is becoming increasingly unlikely following the number of delays and large volume of comments from the public which object the Bitcoin ETF.