At this point, many are hesitant to enter the crypto market. Since the Bitcoin cash hard fork, Bitcoin slipped in the last few days all the way below $3,500. And it isn’t only the hard fork that is causing the problem for Bitcoin and other altcoins. You also have the decreasing hash rate within the Bitcoin network. And also, the Securities and Exchange Commission has been doing some extra effort in order to stop ICOs from selling unregistered securities.
Despite the bearish market, many are still hopeful that this could all lead to regulatory clarity and therefore get institutional investors involved. Many are hopeful that the SEC is going to approve a Bitcoin ETF soon. Over the past months, the agency has rejected many Bitcoin ETF applications already. The SEC even pointed out the possibility of market manipulation as a reason for rejecting the Bitcoin ETF applications.
How Soon Are We Going To Have a Bitcoin ETF?
Is it really possible to have a Bitcoin ETF soon? For SEC Chairman Jay Clayton, he has a few worries in the industry. There are some issues that still need to be addressed before he feels “comfortable” to approve a Bitcoin ETF.
For instance, he pointed out the lack of market surveillance. Unlike stock exchanges, crypto exchanges don’t have this. And this means that it is possible for investors to not have a fair assessment of Bitcoin price. He mentioned that “What investors expect is that trading in the commodity that underlies that ETF makes sense and is free from risk of manipulation”. He also added that “It’s an issue that needs to be addressed before I would be comfortable”.
The New York Stock Exchange and the Nasdaq have their very own “surveillance” systems. Unfortunately, this is absent in the current crypto exchanges. Clayton said that “Those kinds of safeguards do not exist currently in all the exchange venues where digital currencies trade”.
In April, Gemini announced that it is going to make use of Nasdaq technology to detect any possible market manipulation in the industry. It is planned to make use of SMARTS Market Surveillance. Nasdaq made use of this technology to trace abnormal activity. According to Nasdaq, this technology takes a closer look at “unusual trading patterns that could be potential breaches of exchange trading rules and practices”.
The Possibility of Having Institutional Investors
Many are putting their hopes of having a Bitcoin ETF mainly because it could make it easier for institutional investors to get involved in the industry. However, these are just some of the most important issues that need to be addressed soon. And also, you have issue such as how to safely store the assets. Clayton mentioned that “We’ve seen some thefts around digital assets that make you scratch your head”. He added that “We care that assets underlying that ETF have a good custody, and that they’re not going to disappear”.
Because of this, you have the likes of Fidelity entering the crypto market. Fidelity launched its own crypto company in order to handle not only crypto custody for institutional investors but also trade execution. Will there be a Bitcoin ETF soon? Or is it still something that we will be rejected again?