Bitcoin ETFs continue to face a legal labyrinth to legitimacy in the investment space and despite efforts by firms, they keep encountering their own Minotaur in the form of the Securities and Exchange Commission. Nine Bitcoin-based exchange-traded fund (ETF) applications got the seemingly perfunctory rejections on Wednesday, preventing cryptos from gaining more acceptance from investors who are wary of the unregulated exchanges of cryptocurrencies.
Brian Kelly, founder and CEO of BKCM LLC, an investment firm focused on digital currencies, is optimistic that a Bitcoin ETF will finally slay the Minotaur and make its way into the investing world, but it will take time and must address certain issues:
- February 2019 is likely earliest for an ETF–the US Securities and Exchange Commission postponed their decision on a bitcoin ETF until late September, but Kelly foresees the decision getting pushed back further to February.
- SEC needs surveillance ability–how will the SEC monitor instances of fraud rather than prevent it
- Futures market is not mature enough
In an attempt to fall under the governmental regulation of the SEC, the cryptocurrency industry has been unable to bring this into fruition, starting with the Winklevoss Capital Management founders Cameron and Tyler Winklevoss application, which was rejected twice.
The SEC stated, “Among other things, the Exchange has offered no record evidence to demonstrate that bitcoin futures markets are ‘markets of significant size.’ That failure is critical because, as explained below, the Exchange has failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to bitcoin is necessary.”
Bitcoin ETN is Available
While Bitcoin ETF issuers continue their battle with the SEC, an exchange-traded note (ETN) is now available that uses the leading digital currency as its underlying asset. Per a Bloomberg report, American investors now have access to Bitcoin Tracker One and BTC ETN.
The investment product will be available under the “CXBTF” ticker symbol and will be quoted in U.S. dollars. The clearing and settlement of the trade will be available in the Krona and Euro since the product is listed and regulated in Sweden. The ETN is issued by XBT Provider, which is a subsidiary of CoinShares.
For more information on the cryptocurrency market, visit the Bitcoin category.