Bitcoin ETF: bitcoin on Wall Street
For several years the official financial institutions and the movers and shakers of the market didn’t want to admit a cryptocurrency, and businessmen from Wall Street are not just allowed themselves to publicly call the bitcoin “bubble”. But things are changing. It is possible that soon bitcoin and other digital tokens will be recognized as a full-fledged financial instrument.
In this article, we want to present to you a few facts that may become harbingers of good news for bitcoin owners in the near future.
The first bitcoin ETF is around the corner?
The essence of the news is that the first bitcoin ETF can be launched soon.
First, let’s examine the basic concepts. Bitcoin and other digital tokens are a virtual decentralized system. The cryptocurrency market is actively growing and developing, but in many countries, including Russia, the legal status of digital coins is not defined.
ETF (from the English. Exchange Traded Fund) is an exchange-traded investment Fund whose shares are traded on the exchange.
This opens the way for bitcoin to invest in pension and other funds with large amounts of money, working under strict supervision from the state.
The bitcoin ETF, which is likely to be launched first, is called COIN. This project is led by the Winklevoss twins (the Winklevoss). You may have heard of them before from the news, from the Social media movie about the first days of Facebook (in the movie mark Zuckerberg steals their idea, and then forced to resolve the issue in court) and from another recent film “Banking on Bitcoin”.
If you have not seen “Banking on Bitcoin” yet, it is highly recommended to view it. The film tells about the early history of bitcoin, how and why it works, and Wall Street’s complex relationship with bitcoin, full of love and hatred. The same brothers are also the owners of the Gemini cryptocurrency exchange.
Bitcoin ETF: chronicle of events
But let’s get back to the facts. The COIN ETF is ready to launch on a major stock exchange (BATS), and the only missing piece of the puzzle is the green light from the regulator.
- First appeal to the SEC was filed in February 2017. SEC – the regulatory body that regulates all securities markets in the United States of America, dismissed the petition of the Winklevoss brothers.
- Since then, Gemini has repeatedly filed requests for an amendment to the law; the last attempt was made in March 2017.
And that’s probably all you can find on the news. Except, maybe, one message. In August 2017, it was reported that Winklevoss twins had partnered with the Chicago stock exchange to launch the bitcoin futures market; this is planned to be done before the end of the year.
But the most interesting thing, as usual, the news will not write. According to some sources, people from the SEC, who have repeatedly denied approval of bitcoin-based financial instruments, have since left the Agency, citing the fact that the trump administration does not share their values. And now the official responsible for approving the ETF is the same person who wrote the proposal for the COIN ETF while working for Winklevoss twins.
In early October 2017, the US company REX ETF withdrew an application for two cryptocurrency ETF projects-REX Bitcoin Strategy Fund and REX Short Bitcoin Strategy ETF. According to the Director of the RSX ETF, this is due to the position of SEC, who does not want to make a decision due to the lack of available derivative contracts. Previously, its application was withdrawn by the new York company Van Eck, again because of the opposition SEC.
Bitcoin ETFs are likely not to appear in 2017, but may appear in the next two years.
Despite the prospects of Bitcoin ETF, their entry into the market has not yet taken place. The main reason is the negative position of the us securities and exchange Commission (SEC), which delays the registration of relevant applications and strongly recommends companies to withdraw them.
Because of this, some generally lost faith in the emergence of Bitcoin ETFs in the foreseeable future. However, the head of ARK Investment Management Katie wood believes otherwise. In an interview with Bloomberg, she said that although Bitcoin ETFs are unlikely to appear in the coming year, within two they may well enter the market.
Because the regulations in the US deals not only with SEC, but also The Commission on trade in commodity futures (CFTC). And since bitcoin, as a new asset, does not exactly fall under the product or under securities, if the SFTC allows trading in bitcoin futures, then the SEC will have to soften the position and eventually give the go-ahead to the Bitcoin ETF.
What does this mean for the cryptocurrency market?
- There is a high probability that the bitcoin ETF will appear on Wall Street in the near future and will open the way for the largest funds to invest in bitcoin.
- Surely, after COIN there will be a large number of other bitcoin ETFs, and there is a possibility that at least one of them will be able to get approval of the regulators and enter the market.
- The bitcoin futures market should be opened in Chicago before the end of the year, which will further increase the demand for cryptocurrencies.
- The current administration of the United States of America seems ready to support cryptocurrencies.
- Bitcoin itself becomes more useful since the appearance of Se with, Lightning Network and other similar systems.
Mining of new bitcoins is decentralized and regulated by the code, and the cryptocurrency itself is not subject to inflation. The utility of the bitcoin network is growing. Most likely, the demand for bitcoins will increase in the near future.
If the first bitcoin ETF is launched, it will cause explosive growth of the BTC rate and a serious increase in the capitalization of this market. Cryptocurrency will make another major step towards official recognition throughout the world. We will follow the news around the first bitcoin ETF and report it to our readers.