Investors will know on Monday, October 14 whether the U.S. markets regulator will grant approval for a bitcoin exchange-traded fund (ETF), and the Head of Research of Bitwise Investments is confident his company’s product will get the go-ahead.
The Securities and Exchange Commission’s (SEC) October 13 deadline for approving the Bitwise Bitcoin ETF Trust comes at a time when volatility has returned to the bitcoin market – falling more than 20% during one week in September – after several months of relative stability.
Volatility has been an important factor in the SEC’s reluctance to approve bitcoin ETFs and will figure highly in its final deliberations as it continues to seek to “protect investors and the public interest”. The SEC has delayed making the ultimate decision several times, citing concerns over price manipulation and a lack of clear custody.
Bitwise is Hopeful
Despite the SEC repeatedly delaying its decision on the Bitwise EFT since the application was filed in January, Matt Hougan, Bitwise’s Head of Research, appeared confident it would gain approval when interviewed on CNBC's ETF Edge segment. He said:
We're closer than we've ever been before to getting a bitcoin ETF approved.
He immediately addressed the custody issue, saying the evolution of the bitcoin market over the past two years was “from night to day”. He said:
Two years ago, there were no regulated, insured custodians in the bitcoin market. Today, there nearly 10. There are big names like Fidelity and CoinBase. They have hundreds of millions of dollars of insurance from firms like Lloyd’s of London.
Disappointment Along The Way
Hougan’s optimism has not been shared by all applicants to list a bitcoin ETF, however. In September, the Cboe BZX Exchange withdrew its application, filed in January 2019, to list the VanEck SolidX Bitcoin Trust ETF.
Just days earlier VanEck Securities and SolidX Management announced they were, instead, pursuing a more limited option – issuing shares in a similar bitcoin trust that would be sold to institutional investors only.
Twins Cameron and Tyler Winklevoss started their quest to list bitcoin ETF shares started six years ago, but they said in an interview earlier this year that they “remained committed” to the process.
Making Bitcoin Investment Safe
Hougan has also remained committed to getting a bitcoin ETF up and running, saying that his aim is to allow smaller retail investors a way to participate in “one of the most exciting wealth-generation opportunities in the world”. He added:
What the bitcoin ETF would allow everyday investors to do is have safe, simple, secure access to the wealth generation taking place in bitcoin and crypto. It would let financial advisors give it to their clients easily instead of them going rogue.
While the SEC’s main concern remains the risks to small, retail investors, the regulator’s commissioners appear to be softening towards the idea of a bitcoin ETF gaining approval. In September, chairman Jay Clayton said “progress was being made”, but there remained “work left to be done”.
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