Bitcoin (BTC)–The entire landscape of cryptocurrency hangs on an upcoming decision by the United States Securities and Exchange Commission (SEC) in relation to approving Bitcoin Exchange Traded Funds (ETFs). While just a month ago the industry was optimistic about the creation of BTC ETFs, the last several weeks have brought about a change in narrative.
Bitcoin Exchange Traded Funds
It started with the announcement of the Winklesvoss twins’ bid for creating a crypto ETF being denied by the commission, stating the possibility of manipulation as their primary concern. While the market was rallying to double digit gains for nearly the first time this year, the price subsequently took a hit to below $8,000 for BTC. However, the price drop was short lived, as the bulls once again pushed forward on the belief in coming government regulation and institutional money. Bitmex co-founder Arthur Hayes made the high-profile prediction in July that the price of BTC would have no problem reaching $50,000 by year’s end riding on the back of an approved ETF. Unfortunately, the bullish turn in the market did not last for more than a week, with prices falling to below $7,000 and negating the positive momentum created from the ETF hype.
VanEck, a New York-based investment management firm, recently spoke with CoinDesk in an interview about the possibility of crypto ETFs and the impact they will have upon the market and industry. Gabor Gurbacs, director of digital asset strategy, put it this way when posed with the question about whether a Bitcoin ETF will be approved in the upcoming decision,
“I wish I knew the answer to your $1 billion question. Seriously.”
VanEck has been in the headlines as one of a handful of investment firms vying for creation of the first BTC ETF, with the company currently being a favorite in the race for approval. CoinDesk probed further in the interview, asking Gurbacs point-blank how he felt about his company’s chance to be green-lighted for operating the fund,
“Unfortunately, I don’t know the answer. I do know that we have addressed market structure issues and this is a chance for regulators to bring bitcoin under existing frameworks and protect investors.”
Waiting on Approval
CoinDesk goes on to outline the steps VanEck has taken in securing its proposal to the SEC, a move that started three years ago via a the financial company SolidX which first sought to bring an ETF to the market. Gurbacs also makes a strong case for his company’s position over the recently denied Winklevoss ETF, stating that his company is planning to deliver an insured product, with all of the Bitcoin in the fund covered in a situation of “theft and hacks and losses of all sort.”
Gurbacs words go a long way in describing why the market has become consumed with the prospect of a BTC exchange traded fund, namely the security and protection it offers to Wall Street and other institutional investors. In addition, a positive ruling by the SEC would come with government regulations–which may be lamented by the crypto industry’s decentralized ethos–but provide a clearer picture for big-money firms looking to operate in the space. The current state of cryptocurrency is one plagued with hacks and other forms of scandal, with the legality of it all murky by most institutional standards.
Indeed, Gurbacs reiterates the company’s stance towards creating a product that is focused on institutional investors,
“Today, the bitcoin markets are still 90-95 percent retail and institutions are looking for a way to get into these markets so the physical ETF we have tailored to institutions.”
While Wall Street will bring an influx of funds to the crypto markets, hopefully to elevate the price of Bitcoin, some industry figures have become frustrated with the emphasis on SEC approval that is overriding the focus on the underlying technology.
