Waiting for institutional money: SEC postpones a decision on three bitcoin ETFs

Does this come as a surprise? Certainly not, but the US Securities and Exchange Commission (SEC) has decided to postpone a final decision on three bitcoin ETF applications. That was announced yesterday.

October deadlines

Two of the three ETF proposals were submitted earlier this year by Bitwise Asset Management in NYSE Arca. The third has been submitted by investment companies VanEck / SolidX under the CBOE BZX Exchange. In other words, two in New York and one in Chicago. So far, no applications on bitcoin exchange traded funds (ETF) have been approved. It is up to all three to be the first.

The applications of Bitwise were submitted in February and those of VanEck and SolidX last June. From that moment, the SEC has a total of 240 days to reach a final decision. There are interim deadlines on which the SEC is supposed to make a decision, such as yesterday, but they are almost always postponed to reach that full 240 days.

The following deadlines are on October 13 and October 18, respectively. These deadlines are sometimes also shifted by external factors. Consider, for example, the shutdown of the US government at the beginning of this year.

In the meantime, a new Wilshire Phoenix Funds application has been put on the waiting list in June. The next decision on the Wilshire Phoenix proposal is scheduled for September 29.

Worries about market manipulation

The SEC reviews all ETFs carefully as they have expressed concerns in the past about market manipulation, market surveillance and a possible deviation from futures trading. In response, Bitwise has published extensive reports (definitely worth reading) to alleviate those concerns. The conclusion of those reports: the actual bitcoin market is much smaller than expected, some exchanges are messing around with their trading volume to make themselves better. There is also a lot of regulation and control on the market. Bitwise states that the cryptocurrency market can be extremely efficient as soon as false volume data and wash trading no longer occur.

Wash trading is also a form of displaying false volumes, large sales and purchase orders are placed in order books (by one party) that can be striked away with each other. Bitwise calls 95 percent of the trading volume fake.

What is an ETF?

ETF stands for Exchange Trade Funds. A bitcoin ETF closely follows the course of bitcoin. With an ETF, investors do not have to buy bitcoin directly and do not have to create a wallet, but can indirectly speculate on a price movement. According to many cryptocurrency experts, accepting a bitcoin ETF can lead to more attention for bitcoin among institutional investors and a positive decision by the SEC confirms the legitimacy of bitcoin.

An ETF is a negotiable security that represents a basket of securities, shares, bonds, commodities and / or currencies. If an investor wants to invest in gold but doesn’t want to take the trouble to buy, transport and secure gold, then they can also choose to invest in a gold ETF. This follows the value of gold and you can sell an ETF again at will. Another good example is oil. You also don’t want to keep it in your back garden.

With a bitcoin ETF it is not speculated on the price of bitcoin by buying bitcoin directly. That is why there are many questions about the effect of an ETF on the cryptomarket. Bakkt should remove those question marks. At Bakkt, institutions can also speculate on the bitcoin rate, but Bakkt does buy real bitcoin.