A Bitcoin ETF can be likened to a normal ETF. The difference here is that the
underlying asset is the Bitcoin. With the Bitcoin ETF, you do not have to go
through the hassle of buying Bitcoin, storing it and securing it. All you need to
do is to purchase a Bitcoin ETF because it will be as though you are purchasing
Bitcoin itself. This is a lot easier than purchasing the coin.
The Bitcoin ETF tracks the price of Bitcoin in the financial market and assists in
making proper decisions concerning them. Also, the Bitcoin ETF is a regulated
investment that allows you to make transactions like buying or selling, without
using actual Bitcoins.
However, as good as it sounds, it can only be put into use
when it becomes approved by the Securities and Exchange Commission, SEC.
In response to this, there are many exchanges which are now looking to be
listed or launched on USA’s financial instrument (the most anticipated of them
is the CBOE).
Indeed, they are really waiting and hoping to be accepted on the
financial market. Some of these exchanges include the following: Winklevoss
twins Bitcoin ETF, CBOE which is backed by VanEck and SolidX Bitcoin ETF,
Coinbase, Direxion Bitcoin ETF, and so on.
Why has Bitcoin ETFs Been Rejected for so Long?
The SEC has delayed and rejected the approval of the Bitcoin ETF for a long time
now. The first to experience this rejection is the Winklevoss Twin Bitcoin ETF
application which was rejected by the SEC since 2017. According to SEC,
Winklevoss proposal was loosely worded and it is known for not having the best
history.
Moreover, the SEC said that they were afraid of high-level market manipulation
and an absence or low-level of liquidity.
Furthermore, the SEC has said several times in their reports that the reason they
keep rejecting the Bitcoin ETFs has nothing to do with a targeted animosity or a
personal resistance towards Bitcoin and cryptocurrency. Rather, they claim to
have rejected them because of the proposals. In other words, the proposals
were not convincing enough as to why they should accept the Bitcoin ETF
exchanges or applications.
The other reasons for the rejection are the number of votes and the SEC’s
citation of the ETF being inconsistent with the Securities Exchange Act.
However, the SEC commissioner, Peirce, says that she does not believe the
proposed change is not consistent with the Securities Exchange Act. She had
this to say: “I take the position that actually the change that was put before us
was consistent with the Exchange Act.”
Will SEC Accept the Use of Bitcoin ETFs?
From recent comments by the SEC commissioner, Hester Peirce, it is glaring that she has admitted that there’s no reason to prevent Bitcoin ETFs from being
listed. She said at one time that she is a big fan of innovation. Also, during an
interview with CNBC’s cryptotrader host, Ran Neuner, she explained that there
are four commissioners responsible for the fate of the Bitcoin ETF (although
they are five when in their full strength); and their votes really count.
In fact, she had this to say, “I think we have an important role to play telling the
United States and the world that our capital markets are open to innovation.
And that’s what sort of drove my dissent last week and what really drove me to
come back to the agency as a commissioner… I’m a big fan of innovation and I
think that there’s a lot of interesting momentum in this space to solve
problems that can be solved by Bitcoin, cryptocurrencies and blockchain.”
What Impact will SEC’s Decision have on the Crypto Market?
This is one really big source of debate in many places today – on the internet, in
small group discussions, in interviews, and so on. Will there be an increased
value for the Bitcoin as well as other cryptocurrencies in the market? Or will
there be a regrettable failure on the Bitcoin ETF because of its relative
inexperience in the Exchange-traded Fund? These and many other questions
have been answered by several people as well as other famous influencers too.
It is expected that an approval of these Bitcoin ETF companies will have a
resulting impact on Bitcoin and other cryptocurrencies. The Bitcoin and other
cryptocurrencies, subsequently, will become a part of many maintained
portfolios – for both personal and accredited investors. An acceptance of the
Bitcoin ETF companies which are in consideration will yield a proportionate
increase in crypto investments.
It is also interesting to note that the approval of an ETF by the US SEC is
tantamount to legalizing and lending legitimacy to the cryptocurrency industry.
This is just what is needed to give crypto the rank it desires and deserves in the
financial market. Consequently, the action of accepting it will allow more
companies to start making deals with them. Then, many who have doubted the
crypto facts would be more confident to also invest in it.
In fact, the rate at which the Bitcoin and other cryptocurrencies would soar is
going to be incredibly high. It will become a highly sought after asset just as
gold and other valuables are highly sought after. This is because the moment it
is accepted by the SEC, then it would mean to people that it is now a legal item.
Therefore, there would be no limitation to the number of investors – even those
who were once skeptical.
Some analysts have even said that the price of Bitcoin will super exceed its ATH,
all-time high of $20,000 in December 2017. It will soar to seemingly
impossible prices.
Then, it will become obvious that what has been keeping people from the
crypto market is not indifference to the important innovation; but that it is a
fear of losing so much to a market that is “not legally and generally accepted;”
so to say.
Also, newbies will have a lot to gain from this too. This is because an approval
of the ETF license will make it more convenient and less threatening for
newbies to enter the market confidently. They would be able to invest in
Bitcoins without putting themselves in a position where there is a high
possibility of losing their investment. In fact, newbies do not have to go
through the process of creating wallets, using KYC, since they are not directly
trading with Bitcoin.
The major happening of the Bitcoin ETF is the CBOE, Chicago board of
Exchanges. It obviously has the most buzz among investors when compared to
the other Bitcoin ETF applications that are currently under review. Recently, it
announced an increased Bitcoin futures margins amidst the full grown market
manipulation worries. This announcement has drawn the attention of many
including the SEC commissioner.
Peirce definitely said something about this. She said “We will consider each
application based on its own facts and circumstances and we will see what
happens.” If left to Peirce, she would have accepted some or all of the Bitcoin
ETF applications. However, decisions, on her end, are made by the votes of a
team of 5 people. The last vote which involved 4 people turned out to be: “3
against” and “1 in favor of” the Bitcoin ETF applications.
This time, Pierce hopes that the Securities and Exchange Commission takes her
dissent into consideration. She said she believes that allowing a Bitcoin ETF
would increase opportunities for investors. She also added that as resources are
being poured into crypto assets, she wanted to make sure that the nation feels
they can come here, without having to worry about the regulatory structure that
will unnecessarily inhibit the nation.
The approval of a Bitcoin ETF would also very likely boost the price of Bitcoin to
great highs since many investors – cryptocurrency-literate or not – would now
be able to freely and confidently invest in the digital currency through the ETF.
This would be massive because there would be no need to acquire so much
knowledge about cryptocurrency.
To delve into cryptocurrency itself would require proper education. This is not the case with the Bitcoin ETFs.
One other impact that it will have on the world is that there would be an
increase in the number of Decentralized applications and services. Many
entrepreneurs will now be confident to build cryptocurrency based apps, and to
offer cryptocurrency based services. This action will usher in an acceptance of
cryptocurrency by the vast majority of the world. The young, the old, the
learned and the illiterate would all find it interesting and normal to “cryptonize”
things.
A Bitcoin ETF is what is needed to help achieve the dreams of the
cryptocurrency ecosystem. An acceptance of the Bitcoin ETF applications
promises a big expansion of the crypto ecosystem.
As a result, the world would accept it, consciously learn it, invest in it and spread the message.
Indeed, acceptance is all the crypto market needs.
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