One of the biggest questions that crypto observers and enthusiasts have is whether or not there will be a Bitcoin ETF in the near future. 2018 was filled with regulatory changes. And though Bitcoin’s value dropped by 80% along with the rest of the crypto market, many are still putting their hopes on institutional investors that could bring fresh capital. One of the ways on how to make this reality is by having a Bitcoin ETF.
However, it isn’t exactly easy. Several attempts were made over the last months to have a Bitcoin ETF only to be rejected by the US Securities and Exchange Commission. Cameron and Tyler Winklevoss attempted to submit their Bitcoin ETF application twice only to be rejected at both times. As for the latest rejections, the agency pointed out the possibility of price manipulation.
Concerns of Price Manipulation
Jay Clayton earlier this week mentioned at a conference in New York that the agency is only going to approve Bitcoin ETF if the SEC finally saw the market is free of manipulation. He said that “What investors expect is that the trading in that commodity that’s underlying the ETF is trading that makes sense, is free from risk or significant risk of manipulation. Those kinds of safeguards don’t exist in many of the markets where digital currencies trade”.
A few months ago, even the Winklevoss twins decided to have the same market surveillance technology used by Nasdaq. SMARTS Market Surveillance Tech is used to trace any abnormal movement in the market that could signify price manipulation.
However, it seems that price manipulation is quite rampant in the industry. Tether has been suspected of having an involvement in the price movement of Bitcoin last year.
Many believe that VanEck and Solid X’s Bitcoin ETF proposal has the strongest chance of getting approved. VanEck is an investment management company that is based in New York that handles over $47 billion worth of assets under its management. What makes the Bitcoin ETF application different is that it is based on the price of Bitcoin on the over-the-counter market through an index.
No Bitcoin ETF application attempted to use the OTC market. If you will ask Gabor Gurbacs who is the digital asset director at VanEck, he believes that OTC trading desks are more robust and regulated. It is also liquid than exchanges. And given these characteristics, many believe that it has strong chances of meeting the requirements of the SEC.
He also mentioned that “I believe that the comments raised on pricing, surveillance and custody all have appropriate answers, Digital asset market structure is developing rapidly and towards the right direction”.
Whether or not the VanEck proposed Bitcoin ETF is going to be approved remains unknown at this point. Many are looking forward to having a Bitcoin ETF mainly because of the possibility of bringing in institutional investors. Bitcoin has struggled the entire year. There was even a point that Bitcoin reached below $3,500. Another question that has to be answered is if a Bitcoin ETF is enough to get things moving back up for Bitcoin?