SEC Delays ETF… Again
Remember the Bitcoin ETF hype? Late last year it was almost all anyone was talking about. It was supposed to be the mainstream adoption/blockbuster news piece that was going to send Bitcoin and all other cryptocurrencies to the moon. Maybe it still is… But it seemed that week after week there were news stories detailing how proposed Exchange Traded Fund (ETF) proposals were being either rejected or delayed for various reasons.
The Securities and Exchange Commission (SEC) has again come out and announced a delay in another ETF proposal — a big one. Let’s take a look at the details for the average consumer.
What is an ETF?
An ETF is simply a basket of securities that are attached to a floating index price. Basically when an ETF exists a fund manager can invest in it as a single entity, when in reality that entity is an index of a bunch of different assets.
What is a Bitcoin ETF?
A Bitcoin ETF would simply be an ETF that includes Bitcoin as one of the underlying assets in the basket of securities that the ETF has bunched together.
Why Would this be a Big Deal?
ETFs are a widely popular and effective way for average people and fund managers to invest in the stock market. Currently there are very limited ways that average consumers can invest in Bitcoin. Without some basic knowledge of how Bitcoin works and access to a specialised marketplace like Coinbase, average consumers are largely unable to invest in Bitcoin.
An ETF would open up exposure to Bitcoin to a bunch more people — whether they understand the technology or not. However, it is not all positive news as investing in Bitcoin through an ETF means that the investor does not actually own Bitcoin — a real philosophical problem for the cryptocurrency community.
Which ETF was Delayed and Why?
The two companies, VanEck and SolidX put together what they proposed as a ‘Bitcoin Trust’ in 2016 that has since been regarded as the best chance at getting a Bitcoin ETF to market. However, the SEC has again recently come out to delay a definitive decision on whether or not the ETF will be allowed. No Bitcoin ETF has ever been approved by the SEC and the VanEck/SolidX proposal is still regarded as the best chance.
Is an ETF the Holy Grail of Mass Adoption?
In this writer’s opinion: no. While it would increase market exposure of Bitcoin — which could be seen as a good thing for HODLers, an ETF misses the point of Bitcoin — which is that people would own their own funds, without an intermediary. An ETF is just another way to speculate on the price of Bitcoin without actually taking ownership of private keys and being your own bank.
Mass adoption of Bitcoin can only be authentic if the masses realise the true utility and power of a decentralised store of value.
