Cryptocurrencies have become part of mainstream news last year as Bitcoin was able to hit near $20K. But 2018 is quite a different story as the entire crypto market went bearish after regulatory changes were applied in different parts of the world. But what makes crypto experts optimistic is the fact that there is the chance that institutional investors could finally participate.
One of the things that has been catching the attention of the crypto market lately is the possibility of a Bitcoin ETF. Bitcoin ETF is believed to make it easier for institutional investors to participate in the market. In addition to this, it is believed that it can trigger another bull run.
Gabor Gurbacs who is the director of Digital Assets Strategy at VanEck thinks that a Bitcoin ETF could potentially bring billions of dollars worth of new investment to the crypto market in case the Securities and Exchange Commission decided to approve a Bitcoin ETF. VanEck and Solid X Bitcoin ETF application is said to have the strongest chance from the agency.
Not a Smooth Road Towards Getting Approved
Getting approved isn’t an easy thing for Bitcoin ETF applications. In fact, Cameron and Tyler Winklevoss submitted twice and got rejected on both occasions by the US Securities and Exchange Commission. The reason why nine Bitcoin ETF applications were rejected was mainly due to the possibility of price manipulation.
Now, VanEck has been meticulously modifying their ETF application. What it is trying to do is to launch a crypto ETF that is under a conventional regulatory watch. If they will be able to pull it off, it is possible that it could change the landscape for the entire industry. It becomes easier to understand how the crypto market fits into the federal regulatory framework.
According to Gurbac’s interview, “What sets our ETF apart is that it’s a physical Bitcoin ETF. So, it stays true to the bitcoin you own underlying”. This has been criticized by Andreas Antonopoulos saying that a Bitcoin ETF is a bad thing because it is not a Bitcoin that you own.
Gurbac further explained that “It’s fully insured so if there is any theft, hacks, or losses; then the insurance covers it”.
How Exactly Does it Avoid Price Manipulation?
So how can price manipulation be avoided in this case? He explained that “The pricing”, he mentioned that “That we use for bitcoin comes from our indexing subsidiary. It is a regulated entity which provided the first financial standard and regulated indices. The ETF is institutional-oriented, so we have a cap of 25 bitcoins per basket”.
Future of Bitcoin
According to Gurbac, it is possible that Bitcoin will most likely be performing like traditional Gold ETF. What a Bitcoin ETF offers is a safer option for different institutional investors considering that there are a tremendous number of hacking incidences. In fact, in the last year and a half, around $800 million were stolen by hackers.
Gurbac said that “Our gold ETFs are already in a few billion dollar range”. He also added that “There are gold ETFs in $10 billion range as well. I wouldn’t be surprised if a Bitcoin ETF gets in a few billion dollars range”