The article is made on the basis of opinion of David Weisberger, co-founder and CEO of CoinRoutes.
- Recently the SEC has denied or delayed proposal of bitcoin-based exchange-traded fund (ETF) but the proposal was better to be accepted. There is a lot of investor interest in bitcoin and other digital assets. Actually bitcoin ETF should meet the standards for such a product and be consistent with other approved ETFs but according to SEC, bitcoin is failure to do so.
- Another reason for denial is that 95% of the bitcoin spot market consists of fake and non economic activity. It has been found that NYSE Arca, is an exchange on which both stocks and options are traded, has not met its burden to represent that its proposal is consistent with the requirement of Exchange Act Section 6(b)(5) and hence the Commission disapproves this proposed rule change.
Bitcoin is Cut out
In that case there are three flaws and the first one is many exchanging having regulation and not belongs to proof of ‘’fake’’ trades at those exchanges. Secondly, it is tough to understand the SEC’s logic in stating that there is insufficient price discovery from future markets because ETFs have been only sanctioned for gold, silver and other precious metals. On the other corner there are multiple regulated futures markets for bitcoin in the U.S.
The spot crypto markets are much more transparent than spot commodities with far more liquidity available at tighter spreads. The third flaw is that there have been many allegations of manipulation related to other commodities that already have ETFs. Possibility of manipulation in the commodity hears ironic verbalizing the recent RICO case against precious metals traders.
Bitcoin has multiple regulated future markets in the U.S. and the spot markets have significant electronic data on buyers and sellers. These markets demonstrate a critical mass of transparent and displayed liquidity.
The SEC should make accurate and fairly information, including market data, available to the investors. But what SEC is doing is rejecting these applications on the basis of its obduracy is harmful indeed. Retail investors, who want to invest in bitcoin, are driven towards fund products having premiums, which hand investors larger losses, to their net asset value. Unsophisticated investors are using several retail platforms to purchase bitcoin that charge higher fees or spreads. Manipulated markets outside of U.S. refer to a problem for a bitcoin ETF as SEC thinks which is wrong because the markets they refer can be excluded from calculations of available liquidity and price. So as I think the SEC is improperly delaying an ETF approval.