The Desperation Of The First

The SEC is a hard one to bargain with. The approval of Bitcoin ETFs has once again been postponed as the regulator reported yet again that it has delayed the approval of Bitcoin ETFs and set a new tentative date for February 27th as reported by Cointelegraph.

The delay was proposed to completely review the proposals made by the VanEck investment firm and blockchain company SolidX on the Chicago Board Options Exchange (CBOE), which have expressed their willingness to list Bitcoin ETFs.

“The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change”, as stated by the SEC.

The approval of Bitcoin ETFs that the entire market is looking forward to is just a matter of time. The question is how long it will actually take the regulators to adopt the necessary changes in legislation to start accepting the new type of financial instruments. The issue is not a race against time, but more of a race for time, since the adoption of the instruments will herald a new stage in the development of the crypto industry.

An ETF is an acronym for Exchange Trade Fund. These are rather common instruments on the market that are designed to monitor the price changes of their underlying asset. The asset can be anything from gold and oil to Bitcoin. These instruments allow anyone to buy or sell their assets assigned to an ETF on any exchange to any willing counterparty. ETFs are accessible to a broader audience of investors, since their entry threshold is lower, which means that the launch of such instruments tied to some commodities allows private investors to participate in their trade.

As can be guessed by now, a Bitcoin ETF will have Bitcoin as the underlying asset and will thus allow holders to hold the actual currency or the ETF alone. The main upside of actually having Bitcoin ETFs is that it would signify that the currency is being officially regulated by having such an instrument tied to it, and that would mean the start of regulation for the entire crypto industry.

Understandably, given the immense amount of negativity from traditional financial market players like banks and their counterparties, the relation of the regulators to digital currencies and Bitcoin ETFs is just as sour. In fact, the regulators are largely focusing on the impact the launch of Bitcoin ETFs would have on the stock exchange. The effect is predictable as it would mean the official adoption of Bitcoin as a legally traded asset on traditional stock exchanges, like the New York Stock Exchange. Such a turn of events will open the doors for funds and institutional investors to legally and openly start trading Bitcoin as a commodity that has already proven to have considerable value-holding properties. The influx of such an amount of liquidity would result in a spike in demand, and that is predicted to lead to an increase in Bitcoin prices.

The opposite view on the matter is that the launch of Bitcoin ETFs will lead to a domino effect as dozens of other cryptocurrencies and stablecoins like Tether and Ether will want to have ETFs as well, and that would have its own consequences. The popularization of the crypto economy is a dangerous prospect for the financial system, which is losing out to the new parallel digital economy.

VanEck, SolidX and the Winklevoss brothers’ Gemini Trust Co. are the companies leading the charge to popularizing and accepting Bitcoin ETFs as legal instruments. The Winklevoss brothers have repeatedly submitted their applications to the SEC for consideration and have had them repeatedly rejected, but they are not about to give up. They even launched a special ad campaign in New York in the beginning of 2019 to popularize their Gemini exchange. The brothers’ determination can be felt in one of Cameron Winklevoss’ tweets, in which he prophesied that 2019 will be the year of their success.

There is no doubt that Bitcoin ETFs will be accepted, but the bigger question lingering in the wake will be whether their adoption will be enough to truly convince investors of Bitcoin’s potential trading value.