Last week, Bitwise Asset Management’s Bitcoin exchange-traded fund (ETF) was denied by the U.S. Securities and Exchange Commission (SEC).
Since then, analysts have been weighing in on the matter, trying to argue if such investment vehicles make sense for the cryptocurrency market or for regulators.
Todd Rosenbluth, Director of Mutual & Exchange Traded Fund Research of markets research firm CFRA, argued on CNBC on Tuesday that Bitcoin ETFs are still far away from bagging regulatory approval.
Bitcoin ETF Unlikely
During a CNBC interview on Tuesday, Rosenbluth said that the chance of a Bitcoin ETF making it to market within the near future is highly unlikely:
“It’s not the wrapper, it’s not the ETF product that’s the concern, it’s the underlying asset that the SEC is worried about from a fraud standpoint. They don’t want to pull off that band aid too quickly.”
Rosenbluth isn’t the only one convinced that a Bitcoin ETF is unlikely anytime soon. Per a previous report from Blockonomi, cryptocurrency-centric lawyer Jake Chervinsky noted that the SEC’s Bitwise ETF denial order “reads like a damning indictment of Bitcoin’s market structure.”
Indeed, as Arca’s Philip Liu, a securities lawyer, asserted in his own thoughts on the order, the SEC was “unconvinced on all fronts” in regards to the state of the underlying Bitcoin market.
Liu said that the SEC’s comments confirmed that the agency’s commissioners are not convinced that Bitcoin is unsusceptible to price manipulation, presumably due to the international nature of the cryptocurrency market. Indeed, the SEC’s commissioners have long cited concerns about Bitcoin’s seeming susceptibility to immense volatility and questionable price influences.
So, when Bitcoin ETF?
According to Chervinsky’s speculation, at least another 18 months, as that is when SEC Chairman Jay Clayton may be ending his term at the entity. Should he still hold the office for a term after that, then there may be no Bitcoin ETF in America for a long while. Ouch.
Not Even Needed?
While the spotlight still seems to be on Bitcoin ETFs, not everyone is convinced that these products are needed to allow for cryptocurrency to succeed.
Speaking on a CNBC “Fast Money” segment last week, Brian Kelly of BKCM argued that a Bitcoin ETF isn’t essential for continued development and growth in this budding space. While many may take this statement as blasphemous, Kelly went on to back up his comment, drawing attention to the fact that there are other up-and-coming on-ramps.
The industry investor looked to Fidelity and TD Ameritrade — two giants in the American finance realm — adding that “ultimately you’re going to be able to buy Bitcoin in a regular brokerage account, or it’s going to look like a regular brokerage account. So I’m less concerned that you need a bitcoin ETF at this point in time.”
Kelly’s comment is similar to that made by Sasha Fleyshman, a trader at cryptocurrency investment manager Arca. Fleyshman recently wrote on Twitter that the Bitcoin ETFs that are being so heavily lauded aren’t exactly needed, in that that there already custodial and investment solutions that should spark entrees from investors across the board.
I still can't quite comprehend why this space is so incessant on having a #Bitcoin ETF.
With what @Bakkt is doing (physically backed $BTC futures/custody), what @DigitalAssets is doing in terms of custody solutions, etc: why are we so hung up on an ETF for "institutional entry"?
— Sasha Fleyshman (@ArcaChemist) October 10, 2019
Indeed, as reported by Blockonomi today (link to piece regarding Grayscale’s Q3 inflows if published), Grayscale’s cryptocurrency funds, which include its flagship Bitcoin and Ethereum Trusts, saw over $250 million worth of investment in Q3 alone.
What’s more 84% of this $250 million came from “institutional players”, namely hedge funds and family offices.
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