Despite the fact that Bitcoin (BTC) is seemingly out of a bear market, the underlying cryptocurrency industry has still been susceptible to bad news. Just weeks ago, Binance was revealed to have lost $40 million worth of BTC and iFinex, the parent company of Bitfinex and Tether, came under legal fire.
And most recently, the U.S. Securities and Exchange Commission (SEC) has revealed it will not be approving a Bitcoin exchange-traded fund (ETF) proposal from VanEck and SolidX, and will instead by delaying its verdict.
Although this news would have killed the vibe in 2017 and 2018, the market has been widely unfazed by what some call a “non-event.”
Verdict Delayed On VanEck’s Bitcoin ETF
In a document filed by the SEC on Monday, the agency revealed that it will be exercising its right to delay its decision on the VanEck proposal by 90 days, setting the next deadline to August 19th. The agency cited concerns such as there being not enough infrastructure to prevent “fraudulent and manipulative acts and practices”.
No specific examples were given, but the SEC was likely triggered to deny such an application after seemingly one entity triggered a $1,700 flash crash last week, and after Bitfinex was revealed to potentially be illiquid.
This news comes just a few days after the SEC issued a similar verdict on a similar application from Bitwise, which is also looking for a regulatory stamp of approval on its crypto-backed fund.
Harrowing as it may seem though, these regulatory maneuvers were entirely expected. Jake Chervinsky, a crypto-specializing lawyer formerly of Kobre & Kim, explained this weekend that the cryptocurrency market isn’t ready for a regulated product.
He points to the fact that in the order delaying the Bitwise verdict, SEC staffers mentioned the nature, efficiency, and manipulative susceptibility of the Bitcoin market, hinting that the fact that it is far from amicable towards current conditions.
The document then goes on to reference the Bitwise report that 95% of all spot Bitcoin volumes are fake, which was meant to comfort the SEC, not irk it.
Long story short, the SEC wasn’t expected to be ready to delve headfirst into cryptocurrency, despite the developments that have been made in terms of custody, surveillance, and overall market maturity.
These cynical expectations have allowed the space as a whole to shrug off this recent news, almost as if nothing has happened at all. Sentiment is still running high, in other words. Gabor Gurbacs, a digital asset strategist at VanEck, said that his firm’s push towards creating “better-regulated, safer, and more liquid” digital asset markets will not cease with this news.
Others simply pointed out that BTC has actually rallied by 5% since the SEC’s latest comment, accentuating that this news hasn’t hampered this market in any way. as trader “Mr. TA” writes, “Now that the ETF nonsense is out of the way, I think the markets are free to move up again.”
Do We Even Need An ETF?
This begs the question — do we even need a Bitcoin ETF at this point? Likely not. The thing is, the cryptocurrency market is getting financialized with or without an ETF. As popular commentator “The Don” draws attention to, soon, millions of common consumers will be able to purchase Bitcoin and other digital currencies directly from their TD Ameritrade and E*Trade accounts, barring that the rumors are false of course.
More importantly, Bakkt, the cryptocurrency play backed by the NYSE’s owner, is expected to launch its physically-backed Bitcoin futures contract in July. While this isn’t an ETF per se, many expect for this product to have a similar positive effect on the underlying cryptocurrency market as an ETF.
There is still hope for an ETF though. As reported by Decrypt Media, SEC Commissioner Hester Peirce told conference-goers at Consensus, New York that now, or even one year ago, is the right time for an ETF. The fact that the cryptocurrency ecosystem has an “inside woman” does bode well for ETFs, just give it some time.