The last days were quite exciting for a number of stock exchanges, the hope of the green light for a variety of exchange-traded Bitcoin Fund (Bitcoin ETFs).
On the 22. August, the US securities and exchange Commission (SEC) its decision regarding the nine separately submitted to ETF applications from three applicants, ProShares, Direxion and granite shares.
The Regulator rejected the requests made by all and finished first, the plans for the continuation of the individual products. The ProShares had submitted applications to two Bitcoin ETFs, Direxion applications for a total of 5 products and also granite shares, wanted to introduce two new products.
But the SEC seems to have made a u-turn made and announced on may 23. August, to review the rejection of the 9 ETFs.
The Regulator announced a time-frame for the test, but it seems as if the candidates might be in the end able to get their products to continue.
fear of fraudulent behavior and price manipulation
The SEC is equally justified its decision against each of the ETF; all companies do not seem to meet the requirements, the “fraudulent and manipulative actions and practices” can prevent.
In addition, the Regulator expressed concerns regarding the size of the Bitcoin ETF market. Since the sector is very small, it is feared that the exchanges will not be able to prevent market manipulation.
“Among other things, the stock exchange has presented no recorded evidence that the Bitcoin-Futures-markets “markets of significant size”. This Failure is critical, because […] the stock market has failed to ensure that other measures to prevent fraudsters were established and manipulative actions or practices. Thus, a split-Monitoring with a regulated market of a significant size, with Bitcoin is necessary.”
it is Also important that the SEC demonstrated that the original decision was influenced in any way by the value and the use cases of Bitcoin and Blockchain Technology, or a reflection is that.
“[The Agency] stressed that this rejection is based on the Evaluation, whether Bitcoin or Blockchain technology in General, has a Use or value as an Innovation or Investment.”
light on the horizon
Cointelegraph sat down with Anthony Pompliano, the founder and a Partner at Morgan Creek Digital Assets, which addressed the topic in his Newsletter, Off The Chain this week.
Pompliano highlighted the most important decisions in the judgment of the SEC, to be the fair appear to have been, while you remain focused on the safety of the investors.
these ETFs differ in some way from other Offerings, which was also rejected by the SEC. The nine ETFS are backed by derivatives, which meant that the exchanges in Future have contracts and not actual Bitcoins.
Even if the SEC wants to check their latest judgment again, Pompliano convinced that the crypto industry should only be expected in 2019, with the market launch of Bitcoin ETFs.
“The crypto industry will eventually receive from the SEC approved retail products. First, however, must be the right infrastructure and the right controls in place. To this Work, the implementation of a qualified custody and the prevention of market manipulation. It is unlikely that the regulatory authorities will give the Anti-market manipulation measures, which are created in the course of this year. This shifts the ETF approval in 2019.”
notice The Pompliano, there is currently a certain degree of infatuation with Bitcoin ETFs and the possibility of a release for enhanced mood at the Krypotwährungsmarkt. However, the financial instruments could also have a negative impact on the stability of bitcoin value, how Pompliano notes:
“in fact, the Argument can shorten be argued that an ETF is simply more people out there the opportunity to, Bitcoin to, what would drive the price down. Even if this appears highly unlikely, we could observe a significantly stronger downward pressure on prices in the market, as some nine months ago, Bitcoin Futures were introduced. We live in a unpredictable market, so anything is possible.”
Cointelegraph also appealed to the Cornel University Professor Emin Gün Sirer, commented after the decision of the SEC positive:
“the reasoning of The SEC is absolutely fair. The good news is that you can not negative to say about crypto as an asset category. In fact, you seem to be inclined to accept it in the same categorization as with all other assets the same Standards as otherwise applicable. The problems mentioned by you, have nothing to do with the asset, but with the Ecosystem that was built around you.”
Gün Sirer believes that the biggest stumbling block in the crypto-exchanges themselves, which will have to continue to fight with problems such as scammers and the lack of regulatory frameworks around:
“The crypto community continues to hope for a miracle,, the SEC makes a sudden jump in its assessment, and decades of their own practices over the pile of throws and will be disappointed at the end. The SEC has patiently enumerated a number of smaller problems, all related to misconduct in the stock markets. The crypto community needs to learn to demand better, and the Ecosystem in the direction of higher Standards.”
as Long as that does not happen, believes the Professor, that the SEC will continue to reject ETF approvals.
The crypto-Analyst Brian Kelly reacted to the news in a Segment of CNBCs “Fast Money Show” positive and suggested that the latest developments point to a possible approval of Bitcoin ETFs in February 2019. The barriers to entry are, in his view, the ability of the SEC to monitor the trade carefully, and fraud, and to detect Manipulation.
In addition, the SEC does not believe, according to Kelly, that the market for Bitcoin Futures is not yet ripe – as he has existed only since December, 2017.
“I think we are getting closer and incremental, the goal is to get an ETF, and a very positive thing was that Bitcoin is not sold out. If there is a market, be it Bitcoin or Oil, not sold because of the news, as he should, it means that the mood changes.”
waves of change
Even if it remains unclear when the SEC will publish its results after the Review of their latest decision, there is a lot to look forward to in September.
On the 21. September is the SEC of its decision concerning the Direxion proposed ETF, while the decision dead line for a other Bitcoin ETF proposed by the financial services firm SolidX and the investment company VanEck, on the 30. September.
It seems that attempts by the Regulator to give yourself more time to be able to make a well-informed decision regarding the exchange-traded products. This behavior goes hand in hand with the announcement in July, as the second application of the Winklevoss twins for the market was rejected importation of a Bitcoin ETFs.
The decision had far-reaching effects for the crypto-currency market, where prices have tumbled in the Wake of the decision, for almost all of the trade goods.
SEC Commissioner Hester Peirce was a staunch supporter of the approval of Bitcoin-based ETFs. As the regulatory authority refused to accept the Bitcoin ETF, the Winklevoss twins for the second Time, she distanced herself publicly from the decision.
In the Statement, said Peirce, that the creation of Bitcoin-related exchange-traded products (ETPs) Mainstream and institutional investors alike crypto-currencies closer to – and that in a regulated and better safe environment:
“A Bitcoin-based ETP would be investors with an indirect exposure to Bitcoin through a product permit on a regulated securities market is traded, what are some of the points of Friction and concerns, the direct purchase and ownership of Bitcoin arise, would eliminate. These ETPs should be approved, investors may choose whether to buy or leave it alone.”
SEC acts Wisely
Although the SEC has apparently taken a tough stance against exchanges, the Bitcoin-to introduce ETFs, it is worth to take a step back and consider their overarching rhetoric on this topic.
This recent decision to review the results of their own employees, suggests that the regulator is caught in the Juggle.
As the CEO of the SEC, Jay Clayton, said in February, would create the organization in an environment that promotes growth in the sector and at the same time, protects investors from fraudulent practices and scams:
“In simple words, we should welcome the pursuit of technological progress, as well as new and innovative techniques to the procurement of capital, but not at the expense of the principles are sound and proven approaches for the protection of investors and markets.”
in this respect, the problems, the attempts to solve the SEC could be answered through the use of crypto-currencies and Blockchain technology.
Traditional exchanges are certified public accountants and legal entities kept in check to ensure that markets are available for irregular or fraudulent behavior of stock exchanges are protected. Here is the Blockchain-Tech, and crypto currencies to revolutionize according to Gün Sirer, the sphere:
“crypto-assets are special and different. It is possible for us to implement the technical measures that can prevent the construction of such Mal practices. In this respect, crypto has a Chance, the Standards that the SEC applied to Wall Street, not only to meet, but to exceed them. Here, we can rule the world, all other asset classes by a careful and diligent use of technology and lead the Tokenization facilitate conventional plant in this process. Of course, there is a need for the Flick of a switch, away from blind speculation, and distorted markets and the direction of the better technological developments. The faster the crypto community manages to take a unified step to clean the stock exchanges and better, implement a highly secure, decentralized stock exchanges, the faster the SEC approved ETFs will be a reality.”
market volatility
the announcement of The SEC, the original decision to reconsider, had a significant impact on the crypto currency market and ensured that Bitcoin after a small drop after the initial refusal on the 22. August recovery.
The u-turn by the SEC marked a week full of fluctuations, which is also China’s latest crackdown against Cryptocurrency Events were influenced in some Parts of Beijing. At the time of writing, Bitcoin is trading for EUR 5,500 (of 6,400 US dollars).
Bitcoin 7-day price chart source: Cointelegraph the Bitcoin price index .
