Bitcoin ETF Frenzy Sees Letters Flood the SEC's Inbox

  • A Bitcoin ETF may be just around the corner, as crypto supporters have been flooding the SEC's inbox with supporting comments.
  • A notable letter sent to the regulator even argues the ETF would be in line with its goals of protecting investors.

A Bitcoin ETF may be just around the corner. Recently, the US Securities and Exchange Commission (SEC) has been flooded with comments that mostly support the financial product’s approval, while attempting to clarify why it would be positive.

Last month, Cboe Global Markets, an exchange already trading bitcoin futures contracts, filed an application with the SEC for the approval of a Bitcoin Exchange-Traded Fund (ETF). After filing the application, Cboe invited the public to comment on the matter.

Simply put, an Exchange-Traded Fund (ETF) is a product designed to track the performance of an underlying asset. ETFs grant investors indirect ownership of an asset, in this case Bitcoin, and can have several advantages, including higher liquidity and investor protections.

So far, the SEC has received over 90 comments from cryptocurrency supporters telling the regulator they would like to be able to invest in the flagship cryptocurrency through traditional, regulated markets without having to choose bitcoin futures.

According to Bloomberg, Cboe’s application got roughly ten times more comments than a previous Bitcoin ETF application the regulator received back in April. Along with these comments, users have been emailing the SEC letters supporting the move and flooding other areas of its website.

One notable letter came from Morgan Creek Digital Assets. The letter, shared by the firm’s founder Anthony Pompliano, notes that “the citizens of the United States are interested in purchasing, holding, and transacting Bitcoin.”

Per the letter, a Bitcoin ETF would be in line with the SEC’s goals to protect investors. It reads:

Your stated mandate as an independent agency of the US federal government is to “protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.” The approval of a Bitcoin ETF would accomplish these goals.

Morgan Creek Digital

The ETF, it adds, will give users a secure way to buy and sell the flagship cryptocurrency while granting them the protections of an ETF, including “insurance and institutional-grade custody.” The firm’s letter notes that BTC, just like the US dollar, gets its value from people’s belief, meaning it has value because people believe it does.

Given one BTC is trading at $7,460, the “millions of Americans who believe in Bitcoin’s value” should be able to invest in a product that’ll protect them against some of the cryptocurrency ecosystem’s pitfalls, it argues.

Despite the mostly positive comments and letters the SEC has received, there are those who disapprove of a Bitcoin ETF, arguing that such a financial product is “worrisome” because of “ongoing anomalies” in the cryptocurrency’s price. Specifically, the ETF’s opponents believe BTC’s price is being manipulated.

Notably, regulatory developments may mean we’re as close as we’ve ever been to seeing a Bitcoin ETF. As CryptoGlobe covered, SEC chairman Jay Clayton recently revealed decentralized cryptocurrencies like bitcoin and ethereum aren’t securities.

Cboe Global Markets launched bitcoin futures contracts in the US back in December of last year, when most cryptocurrencies were at their all-time high. Its current Bitcoin ETF application will limit trading to SolidX Bitcoin Shares, with one share being worth 25 BTC.

If the application is approved, trading is scheduled to start in Q1 2019. Various applications have been turned down by the SEC, with a notable one come from the Winklevoss Twins’ Gemini exchange, which recently hired a former NYSE CIO.

Ukrainian Railways Uncovers Bitcoin Mining Farm at Lviv Branch

On Friday (November 15), the state-owned Ukrainian Railways ("Укрзалізниця" in Ukrainian, which is pronounced "Ukrzaliznytsia") announced that it had found out that its Lviv branch was illegally operating a Bitcoin mining farm powered by the company's electricity (which is paid for by taxpayers in the country).

Ukrzaliznytsia's press release stated that its security department, along with law enforcement officials, had found a Bitcoin mining farm during an inspection of the premises of the Lviv branch; this "so-called farm" was being "organized by officials of the Lviv Railway unit." 

The person who filed the report on the alleged criminal activity was Oleg Nazaruk, who is the Director of the Department of Economic and Information Security of Ukrzaliznytsia JSC.

Nazaruk said:

During the inspection of the premises where the so-called farm was located, more than 100 pieces of computer equipment were identified that were generating bitcoins. The aforementioned equipment was connected to the Ukrzaliznytsia power grid. The estimated amount of losses since the beginning of the year is UAH 1 million.

The press release interestingly mentioned that, according to the laws of Ukraine, "the issue and circulation of cryptocurrency in the territory of Ukraine is prohibited."

The collected evidence has been passed to the Ternopil Police Department of the Main Directorate of the National Police in Ternopil Oblast.

According to a report by Kyiv Post, this is not the first time that state employees in Ukraine have been caught stealing electricity to mine cryptocurrencies. Back in August 2018, Ukraine's national security agency (SBU) arrested workers at a nuclear power plant (in the city of Yuzhnoukrainsk ) who were illegally mining crypto using electricity from the plant.

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