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Expect ETFs Tomorrow… or in 20 Years Says SEC’s Crypto Mom

Expect ETFs Tomorrow... or in 20 Years Says SEC's Crypto Mom

Washington’s now named Crypto Mom, SEC Commissioner Hester Peirce, has spoken again on the possibility of Bitcoin Exchange-Traded Funds (ETFs) being given the go-ahead by the country’s financial legislators.

Peirce was meeting with representatives from the Digital Assets Investment Forum in Washington and was asked what the state of play looked like for ETF, seen as the long-awaited impetus for a regeneration of Bitcoin’s fortunes on the market.

“Don’t hold your breath” was the answer they received; perhaps not the one that they wanted to hear, but nonetheless both honest and concise in its delivery. A podcast two weeks ago had given some renewed hope to the market when Peirce assured the cryptocurrency community in Washington that a crypto ETF was “definitely possible”.

The commissioner pointed out then that she saw “significant intellectual capital” being invested by both institutional investors and exchanges towards the development of a Bitcoin ETF, perhaps leaving investors scratching their heads over a chicken or egg quandary. Investors see the issuance of an ETF as the impetus for change, not necessarily the other way round.

Peirce said at the meeting that a crypto EFT wasn’t necessarily imminent and gave some homely advice that people should “not live or die on when a crypto or Bitcoin ETF gets approved” referring to the SEC’s historical conservatism prone to being  “a little slow with innovations”.

Although her 20-year threat was clearly tongue in cheek, as were references to investors waking up to a complete change in stance by the SEC, the timbre of her comments were clear; a crypto ETF is not imminent. Another, more weighted and slightly cryptic, comment from the same meeting was sure to get news desks busy with their own interpretations:

“Be careful what you ask for. Never underestimate the ability of regulators to think up regulation requirements you have to follow that you never thought of.”

An ominous portent of the future from Crypto Mom, or is she simply teasing?

 

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As Bakkt Looms, Wall Street Boss Says Bitcoin Here to Stay

As Bakkt Looms, Wall Street Boss Says Bitcoin Here to Stay

Jeff Sprecher, CEO of the NYSE’s parent company Intercontinental Exchange (ICE), has asserted that digital assets will survive, regardless of the market’s dips and dives as seen over the past weeks.

A firm backer of Bitcoin, Sprecher had announced that, with the help of technology partner Microsoft, ICE was planning to launch a new digital asset platform called Bakkt. Starbucks and Microsoft will be major partners of the much-anticipated platform Bakkt and are reportedly going to accept Bitcoin and other cryptocurrencies.

The excitement surrounding Bakkt is centered around its plans to launch physically-settled Bitcoin futures by January next year; recent market sentiment is thought to have postponed the launch, originally scheduled for late 2018.

Sprecher reflected on recent events in the market and Bitcoin’s current position: “Somehow Bitcoin has lived in a swamp and survived… There are thousands of other tokens that you could argue are better but yet Bitcoin continues to survive, thrive and attract attention… Often times in finance, it’s not about being the best — it turns out to be about being the broadest and the most commonly accepted and for whatever reason Bitcoin has become that.”

Despite SEC commissioner Hester Peirce declaring in a 24 November podcast that long-awaited ETF approvals are “definitely possible”, the SEC warns that these won’t be any time in the near future. Kelly Loeffer, Bakkt’s CEO and wife of the NYSE chairman, claims that Bakkt is creating its own opportunities for the future, stating:

“We’re creating that infrastructure that doesn’t exist today, which we think is a big opportunity for institutional investors to come in.”

As for the future, Nasdaq seems unfazed and retains a bullish optimism with its plans to launch Bitcoin futures in 2019 through its partnership with VanEck . Both Nasdaq and the NYSE forging ahead towards becoming cryptocurrency exchanges and Nasdaq’s CEO Adena Friedman asserted that over time the exchange giant could become a cryptocurrency exchange once “the sector matures”.

Clearly, major players are not simply waiting on the SEC for ETF game-changing thumbs up in 2019. New Year’s resolutions are already being made.

 

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Thanksgiving Bitcoin Reflections: Where to Next Year?

In the US, Thanksgiving is an important time of the year for reflecting on the fortunes of the past 12 months, and perhaps a time when one gives a thought to some of the things that perhaps didn’t go so well.

For those Bitcoin enthusiasts sitting around the Thanksgiving dinner table, it is perhaps the latter that is hard to simply shrug off with a slice of turkey, particularly if you happen to be one of those big investors in the cryptocurrency market.

The dinner table discussions in November of 2017 would have, needless to say, been a bit more animated and full of hope. Then, Bitcoin’s launch into the stratosphere hadn’t actually happened, nor was there any indication that it was due for take-off. By mid-December, it was almost up to the USD 20,000 apex which investors fondly reflect on today when discussing the currencies rise and rise… and subsequent fall.

Kyle Asman, partner and co-founder of crypto advisory firm BX3 Capital, reflects on those heady days following Thanksgiving last year when he left a party gathering to use the bathroom and upon returning discovered that Bitcoin had shifted USD 2,000 in a matter of two minutes. He recalled:

“Before that, it was more of a closet thing… I remember that was the only time I had talked about it at my Thanksgiving table — some described it as digital gold, others as a new form of money.”

The dinner table conversation this year will be one of regret and missed opportunities but also, conceivably, of some hope that Bitcoin can be revived from its current dip, as it hovers above USD 4,000 for the first time in 13 months.

Bitmart, a leader in cryptocurrency and Bitcoin mining hardware supplies in Africa, is offering an early Christmas gift to users to try and boost the interest of investors before the festive season, by offering lottery tickets to new users for half-priced Bitcoin. The company is pre-empting the rise that many investors are expecting once regulation is standardized, ETF is accepted and institutions move their money into Bitcoin.

It is also worth reflecting that cryptocurrencies are not simply about their monetary value but what they can bring to the global financial system in terms of functionality and efficiency. For this reason, Bitcoin is here to stay. And fortunes do change, as was seen post-Thanksgiving 2017.

 

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Swiss Stock Exchange to List World’s First Multi-Crypto Based ETP

Swiss stock exchange SIX, the fourth largest stock exchange in Europe with a market capitalization of $1.6 trillion, has followed up on its commitment made back in June of this year to open its doors to cryptocurrencies. With this announcement, it is about to list the world’s first crypto-based exchange-traded product (ETP).

Exchange-traded products (ETP) are a type of security that is derivatively priced and trades intra-day on a national securities exchange. ETPs are priced so the value is derived from other investment instruments, such as a commodity, a currency, a share price or an interest rate. Generally, ETPs are benchmarked to stocks, commodities or indices. They can also be actively managed funds. ETPs include exchange-traded funds (ETFs), exchange-traded vehicles (ETVs), exchange-traded notes (ETNs) and certificates. The ETP that is the most popular is the ETF,  securities that track an index, commodity or basket of assets.

SIX, backed by Swiss startup Amun AG, will track Bitcoin, Ripple, Ethereum. Bitcoin Cash and Litecoin with Bitcoin representing about a half of the ETP’s assets. The break down is XRP 25.4 at percent 16.7 percent in Ethereum, with Bitcoin Cash and Litecoin acquiring 5.2 and 3 percent of the market.

Amun’s co-founder and chief executive Hany Rashwan is certain that as an ETF, the security complies with the same rigorous requirements of traditional ETPs.

Amun AG’s ETP is a branch of the UK based fintech company Amun Technologies who hinted at a crypto ETP last month. Thomas Zeeb, head of securities and exchanges at SIX, sees blockchain-based digital exchanges becoming the status quo within a decade citing cost-effectiveness as a game changer within brokerage, banks, and insurance.

In the US, ETFs have hit a brick wall after the US Securities and Exchange Commission (SEC) rejected at least eight proposals in August of this year. The hope is that at least one successful approval on ETF by the SEC would bring a tidal wave of institutional buyers to the market, picking up prices and moving Bitcoin in a long-awaited upward trajectory. For the hopefuls in the market, the track record so far isn’t good.

In August, XBT Provider AB, a subsidiary of CoinShares Holdings Ltd released an exchange-traded note (ETN) called Bitcoin Tracker One in Sweden. Ryan Radloff, CEO of CoinShares Holdings commented at the time:

“Everyone that’s investing in dollars can now get exposure to these products, whereas before now, they were only available in Euros or Swedish Krona. Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.”

Experts are now suggesting that Bitcoin ETFs will be a “way bigger deal” than cash settlement Bitcoin futures contracts and a boon to the Bitcoin market moving forward. This move out of Switzerland’s “crypto valley” is seen as another step forward towards this end.

 

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Coinjar Sees Bright Future for Stablecoins

The CEO of Australian Bitcoin Exchange Coinjar maintains that stablecoins are due to become a major investor attraction.

Asher Tan has left Melbourne-based Coinjar co-founder Ryan Zhou in charge of Australian operations and taken up residence in London’s Canary Wharf. He clearly has a good view of London’s crypto horizon from his 39th-floor workspace on the banks of the Thames. He likes what he sees.

The interesting thing right now, what’s on everyone’s lips, is what you call a stablecoin. A stablecoin is a coin pegged to a currency, usually the US dollar. It’s a craze right now,” Tan says. “It helps you transfer money around the crypto ecosystem at a stable rate. But there’s a whole lot of applications or use-cases that could come out of it.”

Stablecoins are seen by some as a safe hedge against the volatility of conventional cryptocurrencies such as Bitcoin or Ethereum. Currently, they are underutilized apart from traders using them to guard their positions during bear markets. The most topical of these were introduced after the Winklevoss twins were knocked back by the SEC after their last ETF submission was turned down, only to hit the market with the stablecoin Gemini. The brothers also have their eyes firmly set on the London market as their next potential stablecoin project.

Japanese banks favor a stablecoin method which involves simply storing an equivalent amount of dollars and offering a tokenized version of that amount. Tan suggests that until now, the custody model has certainly been easier than more complex decentralized ways of maintaining a peg but tech startups are now looking for a better more effective and innovative model.

“How do you keep a peg? These are things that usually only a central bank would have thought about five years ago, and now you’ve got tech start-ups looking at economics, and how can you peg a currency to a token. It’s fascinating,” says Tan.

Tan sees dollar digitalization by exchanges at some point in the future as a faites accompli and he is now considering how stablecoins would fit into his future plans for Coinjar, arguing that Europe is the ideal base from which to operate:

“If you go regional in Asia there’s that fragmentation – all the different regulators, the cross-border challenge. Europe is a well-regulated environment, like Australia… We don’t want to create a product and then find out that the regulator is taking an unfriendly approach.”

 

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BlackRock Waiting for Market ”Legitimacy” to Launch Crypto ETF

The largest asset manager in the world, BlackRock, has said that any plans to launch a cryptocurrency exchange traded fund (ETF) will be put on hold until the market matures.

BlackRock CEO Larry Fink featured on CNBC Thursday, where he shared, “I wouldn’t say never, when it’s legitimate, yes.”

While a number of Bitcoin ETFs have been proposed to the Securities and Exchange Commission for its required approval, the agency has identified a number of issues that have prevented any being launched as of yet. Most notably included is a need to protect investors from activities such as insider trading that it believes the market is particularly susceptible to due to a lack of oversight.

It is this level of independence that the market operates with that Fink sees as a factor stifling its growth into mainstream finance.

“It will ultimately have to be backed by a government. I don’t sense that any government will allow that unless they have a sense of where that money’s going for tax evasion and all of these other issues,” he said, although due to the ideology behind Bitcoin‘s creation, it is very unlikely to become backed by the state.

While Fink was skeptical of the cryptocurrency’s apparent ease of use in illicit activities, he does see a future where a digital currency could be traded as a store of value, something that some investors say is Bitcoin’s primary use case. For now, however, he says that there is no need that he can see for a store of wealth unless it involves ”things you should not be doing”.

Blockchain is something that the CEO does have faith in though, describing BlackRock as a ”huge believer in blockchain”. He cites the most likely area for mass adoption as that which involves laborious paperwork such as mortgage applications and ownership.

 

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VanEck: We Have Resolved Bitcoin ETF Concerns With SEC

As the race to launch the first Bitcoin exchange-traded fund (ETF) continues, a meeting Tuesday between investment management firm VanEck and the US Securities and Exchange Commission (SEC) seems to have successfully resolved the regulator’s main issues with its ETF proposal.

VanEck’s ETF application was rejected among several others in August, with the SEC calling into question the ability to prevent Bitcoin markets being manipulated and subject to insider trading. In Tuesday’s discussions, five of the SEC’s key issues that lead to the rejection have apparently been resolved.

The SEC published a document outlining the main points of discussion in the meeting, listing the following reasons it now thinks the VanEck SolidX Bitcoin Trust should now be approved:

“• There now exists a significant regulated derivatives market for Bitcoin
• Relevant markets – CBOE, Bitcoin futures, OTC desks – are regulated
• Concerns around price manipulation have been mitigated, consistent with approval of prior commodity-based ETPs
• CBOE’s rules are designed to surveil for potential manipulation of Trust shares
• Promotes investor protection”

Playing by the rules

It would seem that VanEck made a real and successful attempt at altering the structure of its ETF in order to reach compliance with the SEC’s heavy regulations aimed at protecting investors.

Several of the changes made are listed in the document published following the meeting, including that VanEck has agreed to use OTC Bitcoin trading desk pricing which is regulated by the CFTC, and instituting a USD 200,000 share value to price out retail investors.

SEC review deadline set for Friday

As Bitcoin News reported earlier this month, the SEC has a deadline set for approving the ETF’s: Friday 26th October.

While analysists have generally agreed they do not expect to see an approval until next year, the success of VanEck’s meeting may prove them wrong.

 

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SEC ETF Review Deadline Set for 26th October

The much-anticipated launch of a Bitcoin exchange-traded fund (ETF) has a new deadline for approval from the US Securities and Exchange Commission (SEC): 26 October.

9 ETFs still in the works

In the time leading up to 26 October, the SEC says it is reviewing proposed changes to the rules that would reflect on nine separate ETF proposals from three different applicants. These applicants constitute ProShares in conjunction with the New York Stock Exchange with their two proposed ETF exchanges NYSE Arc, five ETF proposals from Direxion and two from GraniteShares.

The SEC called for ”any party or other person” to file a written statement either supporting or condemning the ETFs in the allotted time before the deadline.

As Bitcoin News reported last month, 1,400 written submissions were filled in the case of the VanEck SolidX Bitcoin ETF, with a notable majority in favor of launching the trading fund, although it would seem this was not largely taken into consideration by the SEC as it delayed making any decision on the case. The director of VanEck, Gabor Gurbacs, clearly thought the decision should have gone another way, saying, ” The public has spoken! Bitcoin is compatible with the US and global capital markets.”

How did we get here?

In late August, the SEC chose to reject the nine ETFs in question, only to decide to review the cases the following day.

The regulatory body said that as they stood, each proposal failed to comply with the Exchange Act Section 6(b)(5) that requires ”a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices”.

It noted that without any central body regulating the cryptocurrency space, the market is particularly susceptible to pump and dump schemes, being unable to adequately protect traders.

 

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Canada Better Geared for Crypto Than US, Says Fund Boss

The head of Canada’s first fully-registered cryptocurrency investment firm has said that the country is further advanced in cryptocurrency policy than its neighbor the US.

CEO of First Block Capital, Sean Clark, has called for Canada to become a leading hub for crypto development and innovation due to his country’s more favorable conditions for new technologies.

Clark cites conditions in the Canadian crypto environment such as promoting educational awareness of new technologies and the government’s political will to push technology forward as indicators that the authorities fully comprehend the potential of blockchain and cryptocurrency to replace outmoded technologies:

“I think in general, the Canadian regulatory bodies understand the potential benefits of blockchain and cryptocurrency, and traditionally Canadian regulators have been open to technological innovation. That is different from what you get in places like the US.”

He maintains that the position in the US is quite different where the SEC seeks to have more control as a regulator which consequently restricts new innovations from taking hold. He sees this as a great advantage for Canada over time, providing the country with a huge pool of skilled technical know-how which can be drawn to the US. Clark believes government interest has been key in Canada’s blockchain and crypto development:

“This is what we’re seeing trickling down to the regulatory environment… as they are not stone-walling but rather embracing and wanting to understand the implications of blockchain technology and working with local companies to be able to understand and have the asset class flourish.”

The CEO sees his company as an example of how crypto forums can and should work closely with government regulators to push innovation into the frontline of technology. Part of the success of cryptocurrency-related companies having more freedom is the enthusiasm for crypto shown by Canadian prime minister Justin Trudeau.

First Block Capital became a mutual investment fund late last year. It works in a similar way to an ETF, enabling investors to purchase and store the equivalent of Bitcoin and redeem as and when needed.

 

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Growth Over Time in Crypto Market Could Jumpstart SEC’s ETF Decisions

Asjylyn Loder, writing for the Wall Street Journal, feels that Bitcoin exchange-traded funds (ETFs) will happen; it’s just a matter of time.

After ten rebuffs to date, it must seem to these crypto companies that they are continually banging their heads against a wall. Loder reminds them that history is on their side, although when this history is examined, the time lag may be a bit of a wake-up call for the new players on the block, as she points out, “The first ETF pegged to volatility futures launched five years after the debut of the futures, and the first oil ETF followed oil futures by 23 years.”

However, those early applications have an advantage, which is clearly why they keep on coming. The hope is that at least one successful approval on ETF by the SEC would bring a tidal wave of institutional buyers to the market, picking up prices and moving Bitcoin in a long-awaited upward trajectory. For the hopefuls in the market, the track record so far isn’t good. It could be that the SEC is waiting for Bitcoin to move first.

With Gemini’s failure to become the first-ever cryptocurrency ETF on a regulated exchange came other subsequent rejections by the SEC: five more applications failing in the same week as the second Winklevoss attempt. This latest string of rejections seems to be a cementing of the SEC’s hard-line stance.

GraniteShares, one of the ten unsuccessful proposals to the SEC, sees the agency regarding crypto assets as a high-risk class, one of the issues that may add to the tardiness of any decision. Co-founder Will Rhind says the commission is even tougher on cryptocurrencies than conventional futures because of the risk factor, arguing:

“That risk has always been a disclosure issue… But in this case, we had to go way beyond that and prove that the market is not being manipulated, which is a standard that is impossible to prove.”

Patomak Global Partners chief executive Paul Atkins was on the inside once as an SEC commissioner. He sees time as crypto’s best friend: “Is [the SEC] a merit regulator, or should investors be able to decide for themselves what to invest in?”

With three re-evaluations by the SEC of proposals turned down earlier this year, in part because of the concern that the cryptocurrency market is too small, Loder agrees that time may well become the saving grace for Bitcoin ETFs. But if this is the case, Bitcoin trading would need to take the much-awaited leap forward which the crypto community is waiting for in order for the SEC to sit up and take notice.

 

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