Last week, a metaphorical sword was stabbed through the hearts of crypto investors, as the SEC announced that it would be denying nine Bitcoin-backed ETF proposals from ProShares, Direxion, and GraniteShares. In three individual documents elaborating on the verdict, SEC commissioners outlined the fact that Bitcoin markets lack “significant size” and are still subject to widespread fraud and manipulation. While the U.S. regulatory body has since sought to stay and “review” the denial verdict, the SEC’s concerns regarding such a vehicle still rang true in the ears of some, including the Wall Street Journal’s Paul Vigna.
As such, Vigna, who has become the WSJ’s foremost crypto reporter, recently appeared on CNBC to discuss his opinion regarding the regulatory state of Bitcoin/Crypto-backed ETFs.
Commencing his segment regarding the subject, the reporter stated:
The SEC’s concerns are very valid… for a currency that makes a big deal out of having a public transaction ledger, there is not a lot of transparency with exchanges — what’s going on behind the scenes. You can see the price, the transaction but you don’t really know who is doing the exchanges.
He went on to compare cryptocurrency markets to traditional capital markets, like a commodity or stock exchange, noting that such legacy exchanges actively provide “a lot of” oversight for these markets, and have a good grasp on the identity and background of its customers. Moreover, Vigna added that these systems allow a firm such as the Intercontinental Exchange (ICE) to pinpoint “anomalies and any kinds of manipulation” to prevent economic, political or legal damage. Even with these measures in place, malicious individuals and entities still do their utmost best to “game these markets,” leaving the cryptocurrency in an even worse regulatory state.
Vigna revealed that unless the SEC can determine how much manipulation is going on and from where it will be neigh-impossible for an ETF to hit retail markets.
An ETF Wasn’t Bitcoin’s Destiny
CNBC host Mellisa Lee then acutely brought up the idea of a Bitcoin ETF being a catalyst for markets, but noted that such a product goes against the very ethos of decentralization and self-custody. Alluding to the fact that custody isn’t proper ownership of the private keys, Lee added:
The passage or the approval of an ETF has been looked at by many in the crypto world as the next big catalyst… But there are some in the cryptocurrency industry who look at this and think that this isn’t right, so unless you own the Bitcoin, you don’t own the Bitcoin.
Vigna backed up this statement, pointing out that the “rift” between diehard decentralists and Bitcoin custody ETF vehicles will “not go away no matter what avenue or products are developed to get into Bitcoin.” But as many like to bring up, it is unimaginable to see the SEC approving an ETF or similar medium of investment without an established, experienced and secure custody solution.
Drawing his segment to a close, WSJ reporter Paul Vigna provided some insight on the SEC’s role in the cryptocurrency industry, adding that the regulatory body is doing its best to bring cryptocurrencies to the mainstream. He stated:
I think we’re at the point that good governments aren’t looking at this (crypto) as something they need to clamp down on, outlaw it, or drive it out of existence. They see that there is potential here and we have something that might be able to benefit people… They are trying to figure out ways where they can regulate it, make it mainstream enough so that we can use in our daily lives.
Photo by Joakim Honkasalo on Unsplash
