Reggie Browne, a living legend on Wall Street and one of its most prominent exchange-traded fund (ETF) developers, has said a bitcoin ETF will come “no time soon,” citing lack of market activity.
Speaking yesterday at an industry conference, Browne explained that :
it's very difficult for the commission to wrap their heads around a positive approval because there's no data yet [...] the markets just aren't here.
Liquidity, ETFs, and Browne
Market liquidity was a sticking point for the U.S. Securities and Exchange Commission (SEC) during their recent review of the proposed VanEck SolidX bitcoin ETF, wherein the Commission repeatedly emphasized that markets must be “of significant size.” This is the case partially so that there is enough market data to detect market manipulation, and partially because liquidity is generally very important in ETF trading.
Browne has a reputation and historical role as an ETF market maker - a critical role for providing market liquidity. “After the investor, the [lead market maker] is probably the most critical piece for a new ETF,” the Washington Post quoted an ETF specialist as saying.
He thus played a critical role in fostering the ETF industry when it was in its infancy, and is a central figure in the astronomical growth of ETFs during the past two decades, being referred to as “a missionary, especially in the institutional space. He’s the person on the edge showing people the power of the exchange-traded fund.”
Between 2000 and 2014, ETF assets grew from $79 billion to $2.4 trillion, and ETFs were “the biggest innovation in the distribution of investment products since the invention of the mutual fund in the 1920s,” according to another ETF expert quoted by the Post.
‘That’s why Reggie’s the godfather’
In light of Browne’s great stature and experience on the subject of ETFs, the prospect of a bitcoin ETF approval no longer looks very auspicious. This notion, however, clashes with recently reported rumors that would suggest the opposite.
Only time will tell, as the SEC has a maximum limit of February to reach a conclusion on the VanEck/SolidX bitcoin product.
0/ It kills me to tweet about SEC rulemaking procedures, but given the confusion on #crypto twitter today, it feels necessary.— Jake Chervinsky (@jchervinsky) July 24, 2018
TL;DR -- the SEC can, and probably will, delay its decision on the VanEck/SolidX commodity-backed #bitcoin ETF until ~February 21, 2019.