On Wednesday afternoon, the SEC released one of the most important crypto-related documents to-date. The two-page document, authored by SEC deputy secretary Eduardo A. Aleman, revealed that the Chicago Board Options Exchange (CBOE) had withdrawn its proposed rule change that would have facilitated the listing of VanEck and SolidX’s collaborative Bitcoin ETF.
Therefore, the exchange, U.S.’ largest options market, effectively killed the proposal, which garnered mounds of support heading into 2018’s year-end. This document was filed on January 22nd, just earlier today.
Speaking on CNBC’s “ETF Edge” segment, VanEck’s namesake and chief executive, Jan Van Eck, claimed that due to the government shutdown, its partners and crypto division were unable to continue discussions with the SEC regarding market manipulation, custody, a lack of liquidity, along with other qualms. And as such, the partners convened to determine that deferral would be necessary.
In spite of this recent news, the hype train surrounding these products have continued to chug along. Just weeks ago, Bitwise Asset Management filed a Bitcoin ETF application to American financial regulators via a so-called S-1 Form. Just days earlier, the Winklevoss Twins, the two behind one of the first, if not the first Bitcoin ETF proposal (which was denied), made it clear that they expect to see such a product through, whether it takes months, or even years.
Bitwise recently released a report on this form of crypto vehicle on Anthony Pompliano’s Off The Chain, which accentuated that there’s still demand for crypto-backed ETFs. The company revealed that 58% of financial advisors (data set of 150) would prefer investing in cryptocurrencies via an ETF, rather than through futures or spot. Bitwise also added that “the launch of an ETF” would push 35% of its survey’s respondents to make allocations towards cryptocurrencies.
Some Skeptical Of Crypto ETFs
While there seems to be money betting on a Bitcoin ETF launching eventually, some pundits are skeptical. As reported by Ethereum World News previously, Brian Kelly, a CNBC contributor & chief executive at BKCM, noted that cryptocurrencies are likely to post gains, citing Bitcoin’s growing use case as a gold alternative, in 2019.
However, Kelly, who runs a crypto hedge fund that utilizes a long-short strategy, subsequently noted that the likelihood of a Bitcoin ETF making it through extensive regulatory hoops is close-to-zero. The CNBC “Fast Money” panelist backed his comment by remarking that much remains “unresolved,” likely referring to the mass of concerns that the SEC has had with crypto markets historically.
In another report of ours, it was explained that a number of guests on CNBC Africa’s “Crypto Trader” segment were also skeptical of the approval of a U.S.-based Bitcoin ETF in 2019.
Meltem Demirors, the chief strategy officer at Coinshares, the chief strategy officer at crypto asset manager CoinShares, recently noted that the proposal from VanEck, SolidX, and CBOE will “absolutely not” get approved.
Demirors then noted that a regulatory green light is unlikely to bless any other proposals, whether it be from Gemini, Coinbase, or otherwise. She explained that as it stands, the SEC would get no political, financial, or social tailwind from approving a Bitcoin ETF. Instead, Demirors noted that there is solely downside for the financial regulator, especially considering the tumultuous political climate that Americans face today.
The CoinShares C-suite member then explained that many forget that SEC and CFTC incumbents are appointed, and are mandated to stay in line with their party’s mandate. And, with there being nuances regarding America’s stance on fintech and how the nation’s economy should progress, the advent of a properly-backed crypto ETF is that much more quixotic. This has all only been accentuated by the ongoing government shutdown, which has entered its second month.
In closing, putting a cherry on the proverbial cake, Demirors remarked that from a fundamental viewpoint, approval is likely far off, as there remain underlying security and liquidity concerns about the underlying crypto market.