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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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