The Securities and Exchange Commission issued a note on Monday confirming that it will delay its decision on three Bitcoin ETF proposals.
An ETF or exchange-traded fund is an investment vehicle that tracks the performance of a particular asset or group of assets. A Bitcoin ETF will track the price of BTC, the largest crypto asset by market capitalization. The advantage of an Bitcoin ETF is that it will allow investors to buy into the ETF, and therefore gain expose to Bitcoin as an asset class, without having to buy and custody the asset itself.
The three different ETF proposals are Bitwise Asset Management via the NYSE Arca exchange, VanEck/SolidX under the Cboe BZX Exchange and Wilshire Phoenix Funds, a fund that proposes to hedge BTC using Treasury bills.
Since 2018, all Bitcoin ETF proposals have been rejected or delayed by the SEC, due to concerns over fraud, custody solutions, the potential for market manipulation, and the complications that arise from a global market that is not under any one regulatory framework.
The ETF will pump Bitcoin?
Most crypto commentators are confident that the approval of a Bitcoin ETF would be a bullish catalyst for the digital currency’s price. Bullish analysts tend to make a comparison to gold-linked ETFs. In 2003, the price of gold dramatically increased following the introduction of the first gold exchange-traded fund.
One reason for this was that access to the precious metal became much easier, and retail investors were thus able to gain exposure and diversify their portfolios without having to purchase and store physical gold. Today the SDPR GoldShares ETF is one of the biggest ETFs in the market with over $35 billion under management.
Considering the massive growth trajectory following the launch of gold ETFs, many crypto enthusiasts believe that a similar positive correlation may exist between the Bitcoin price and the launch of Bitcoin ETFs. Furthermore, an ETF launch is expected to precipitate an influx of institutional money into the crypto market.
However, Bitcoin evangelist Andreas Antonopoulos says that a Bitcoin ETF is a wolf in sheep’s clothing and that it will lead to more centralization. Antonopoulos worries that an ETF will give larger players a means to try and influence the price of BTC.
What happens now?
The crypto industry can count on SEC commissioner Hester ‘Crypto Mom’ Peirce for support. Peirce has spoken out several times in support of a Bitcoin ETF, but she has also urged caution and at the end of 2018 she seemed to suggest that patience is required.
“It could be 20 years from now or it could be tomorrow,” said Peirce on a possible ETF timeline. “Don’t hold your breath. The SEC took a long time to establish Finhub. It might take even longer to approve an exchange traded product.”
Even so, the SEC cannot postpone its decisions indefinitely, and in October it must make a final decision on whether to accept or reject two of the proposals. Tick-tock.
Wilshire ETF proposal: September 29 (This proposal can be delayed another 150 days) Bitwise ETF proposal:October 13 (Final deadline for a decision, no more delays) VanEck ETF proposal: October 18 (Final deadline for a decision, no more delays)