Despite the Securities Exchange Commission (SEC) putting the kibosh on a spot price bitcoin exchange traded fund (ETF), market pundits think 2022 will eventually bring this product to the market.
It seemed like the introduction of a bitcoin futures ETF would eventually provide a smooth pathway for a spot price product, but that hasn’t yet been the case. What the SEC giveth, it also taketh away.
The SEC, regarding ETF provider VanEck’s proposal for a spot price ETF, said, “the Commission concludes that [the fund] has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with … the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and to ‘protect investors and the public interest.’”
It might seem like the market for more bitcoin ETF products may have backtracked to square one. However, cryptocurrency exchange Gemini and its global head of business development, David Abner, present a more positive future.
That optimism stems from the approval of another bitcoin futures ETF from Valkyrie. The asset management firm also has a number of trusts investing in cryptocurrencies, but the ETF expands their product offerings and hopefully introduces more investors to their trusts.
“I’m still very bullish,” Abner said. “I think they are just sort of waiting to take that next step. They’re potentially looking for some greater, clearer regulatory guidelines around the industry, so maybe we see that in Q1 and then we see an ETF right after it. I think there’s a little bit of movement in that direction.”
Would-Be Bitcoin Investors Going Rogue
Will a spot price ETF bring investors closer to the cryptocurrency markets? Some detractors of futures ETFs feel that those funds are providing artificial exposure instead of actual exposure, and that could eventually lead to rogue behavior — something akin to giving a student a loaded weapon in the first five minutes of an introduction to firearms course.
“For the average advisor out there that is managing a diversified portfolio for their clients, not being able to buy bitcoin or a spot bitcoin ETF on a brokerage platform is somewhat of a handcuff,” said ETF Trends CEO Tom Lydon.
“If your clients go rogue and they go off and open up a Coinbase account, they potentially could shoot themselves in the foot as far as the volatility,” Lydon added.
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