Category Archives: ETFs

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Chairman US SEC Remains Coy on ETFs, Reiterates Tough Stance on ICOs

In a recent CNBC interview, Jay Clayton, the Chairman of the US Securities and Exchange Commission (SEC), maintained the watchdog’s stance on ICOs while remaining tight-lipped about the future of Exchange-Traded Funds (ETFs).

We’ve had no ICOs registered” was his response to a question posed by the show’s presenters on deals made with two ICOs, Airfox and Paragon. He further added, “To the extent that an ICO is being conducted offshore or pursuant to a private placement exemption, fine; to the extent that you’ve conducted a public offering in an ICO, it’s non-compliant.”

The SEC, along with the Commodities and Futures Trading Commission (CFTC) of the US, have ruled that specific cryptocurrencies such as Bitcoin are not securities since they do not offer any stake in the business or offer future returns to investors. ICOs, however, can be securities and each one has to be considered individually to ensure the tokens are securities or not. “I think we’ve been clear that Bitcoin isn’t a security, but many of the ICOs that you see and talk about – they are securities,” Clayton said.

Even on other issues, such as Bitcoin ETFs, the chairman evaded answers and stressed the SEC’s existing stance, “I’m not going to comment on timing or anything like that, but we’ve been clear on some of the issues that are of concern to us.”

The questions stemmed from the fact that SEC had ordered Paragon and Airfox to return the millions of dollars it had gathered from investors and then further pay fines the regulators placed on both platforms on violating regulations. The platforms’ tokens came under the classification of securities and were found guilty on account of selling the said securities without proper licensing.

Airfox and Paragon had raised a combined USD 27 million from their ICOs last year.

 

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SEC Commissioner Peirce: ETF “Definitely Possible”

In a podcast aired on 24 November, SEC commissioner Hester Peirce has commented that the launch of a future cryptocurrency ETF is “definitely possible”.

Her comments could signal a change in the SEC’s stance on ETFs which until now have failed to get through the regulator’s screening process.

However, the comments by Peirce are her own, as she makes clear in the podcast, and not necessarily those of the SEC as a whole. Nonetheless, the commissioner has pointed out that she sees “significant intellectual capital” being invested by both institutional investors and exchanges towards the development of a Bitcoin ETF.

It is worth noting that Peirce represents one-fifth of the SEC’s regulatory body in terms of managing the entire regulatory landscape environment for security investments in the United States, so her views carry significant weight in terms of being a mouthpiece for the government body.

Peirce is perhaps better known for her criticism of how the SEC handled the Winklevoss twins’ rejected application for an ETF in July of this year. At the time, she commented:

“I think that one of the reasons is that in the past, with other applications for commodities – you might think of metals – [the SEC] also looked at the underlying markets. I would argue that this also was not the right approach at looking at those. Of course, that was well before my time here. But, in addition, I think that there is concern around new technologies, and I think some of that is reflected in the disapproval order.”

She added that she felt that the SEC in general treats innovation with caution, feeling that the body maintains it is safer to simply “put the brakes on” than to approve ETF applications. The commissioner suggests that the SEC needed to figure out a way of being less cautious and letting “innovation go forward” rather than being concerned about criticism if projects fail.

The ETF debate is a topical one at present, particularly with Bitcoin struggling to find any stability in the market, and along with the adoption of cryptocurrencies by institutional investors, the approval of ETFs is now being seen as the industry’s saving grace.

 

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Bitpay: Bitcoin the “Under Pound Gorilla” Will Eclipse Many Other Currencies

Global Bitcoin payment service provider Bitpay is making some upbeat predictions for 2019 which certainly paint a different picture to the digital currency’s rocky ride as 2018 comes to a close.

The Atlanta-based company’s Chief Commercial Officer (CCO) Sonny Singh predicts that 2019 promises to be an “exciting” year which will push Bitcoin’s value up to between USD 15,000 and USD 20,000 by next December.

He believes that with the entry of Fidelity and Intercontinental Exchange into the market and ETFs getting the green light, 2019 will take on a whole new look when it comes down to investment opportunities. He commented it would be Bitcoin that would eclipse many other digital currencies whose fortunes were less easy to foresee, suggesting, “I don’t know what’s going to happen to them.”

He said, “There’s a night and day difference between Bitcoin and everything else. Bitcoin is the under pound gorilla, it’s the one that has the mass network effect… [the one] the traditional financial incumbents are building products around.”

In terms the durability of his gorilla, Sing argues that “Bitcoin survives first”, even in a poor market, despite its fluctuating fortunes. Blockstream CEO Bobby Lee, brother of Litecoin founder Charlie, agrees, suggesting that despite flashes of green in the last 24 hrs, Bitcoin could still threaten USD 3,000 but long-term, he feels it will overtake gold.

In this bear market for #Bitcoin, it’s worth reminding everyone that $BTC is still only one-hundredth of the value of #Gold: $80 billion vs $8 trillion.
Gold is worth 100 times more than Bitcoin today!
What will the ratio be in 10-20 years?
Will it flip, with Bitcoin worth more? pic.twitter.com/VIpzIDKfo0

— Bobby Lee (@bobbyclee) November 20, 2018

Currently, there is a consensus among certain cryptocurrency experts that with Bitcoin’s growing convenience as a payment method, illustrated by the march of ATMs worldwide, along with the digital currency becoming an internationally recognized household name, past hype could surrender to real value. A deflation of Bitcoin could “clean out weak hands”, according to the views of many investors. Serious players in the market would then be left to establish Bitcoin’s real value. EToro analyst Mati Greenspan says the ship isn’t sinking, but simply readjusting to its load:

“What we’re seeing now are the after-effects of the unprecedented rise of Bitcoin and other crypto assets in 2017. This year is simply a retracement of that… These cycles can sometimes be accentuated in the crypto market due to the riskier nature of this nascent industry. In the same way, previous cycles have not signaled the end for broader markets, these price movements don’t signal the end for crypto assets.”

For now, Singh’s gorilla is still in the mist, waiting for its moment to escape.

 

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Sell or Hodl? Crypto Traders Seek Direction in Fluctuating Market

With uncertainty in the cryptocurrency market and a sudden drop in Bitcoin’s value overnight, investors are again posed with the sell or hold dilemma, but many experts maintain that increased demand for a Bitcoin exchange-traded fund (ETF) augers well for the flagship digital currency in the long term.

Long-term forecasters say that Bitcoin has a strong likelihood of becoming a reliable store of value and a viable payment mechanism. Experts point to rising futures volumes and increased institutional participation in trading as positive outcomes going forward.

Historically, negative news hits the market with a crash, such as the SEC’s rejection of nine cryptocurrency ETFs in August, despite the US regulator stressing it “emphasizes that its disapproval does not rest on an evaluation of whether Bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment”.

Signs are that despite this latest drop in market prices, the cryptocurrency ecosystem is healthy with daily trading almost doubling its total just days ago. Crypto advisory firm Autonomy’s co-founder Ricky Lee suggests, “For our trading activities, the [upcoming Bitcoin Cash] hard fork recently has generated tremendous interest and trading volume, above 4 billion daily, among traders.”

With Bitcoin’s value shedding almost USD 1,000 in just a few hours late yesterday, Willy Woo, the founder of data analytics site Woobull suggests that overnight recovery is highly unlikely and the current market trend may continue well into 2019. CNN Bitcoin analysts suggest that USD 5,633 is looking to be the current interim resistance level, but a break below that support would have the effect of scaring off investors. Conversely, a break above this level would suggest a long position at USD 5,712.

Looking for factors as to why the drop happened, whether it be Bitcoin futures or the Bitcoin Cash fork, there are suggestions that the effect of the sell-offs in tech stocks led by Apple on Wednesday are making their mark on cryptocurrency prices, although most point to the current uncertainty around so-called altcoins Bitcoin Cash and Ethereum, both poised for fundamental and controversial changes in development and infrastructure.

 

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Novogratz: Bitcoin Renaissance Coming as SEC Delays

Galaxy Digital Capital Management’s crypto billionaire founder Michael Novogratz is putting a very positive spin on Bitcoin’s current position, maintaining it has the hit the bottom and is ready to bounce.

Speaking yesterday at Yahoo Finance’s second annual All Markets Summit in New York, the ex-hedge fund manager has further cemented his support of cryptocurrencies, suggesting that Bitcoin is now holding its own above USD 6,000 as a store of value, arguing, “Bitcoin has held USD 6,000. Yes, it is off its highs, but it has established itself as a store of value… I think institutions are moving towards investing. It’s shocking how much has happened.”

Novogratz has long been an outspoken supporter of crypto and one of the industry’s staunchest promoters, maintaining that street level is where new technology will flourish where regular people do things like “rent rooms, ride cars and pay each other to do work“. He has made the point that decentralized “revolution” is yet to make its most significant impact on markets and that banks will miss out on Bitcoin’s continued rise.

Despite last night’s decision by the SEC to delay any decision on Bitcoin exchange-traded funds (ETF) the currency is holding its ground and taking many altcoins with it. The ETF decision is now thought to be delayed until February next year. An official statement by the Commission stated:

“Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change… Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved.”

Some investors see the decision to delay even further as an indication that the SEC is likely to grant approval to ETFs when it finally makes its move next year.

 

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