The US Securities and Exchange Commission has postponed the decision on VanEck application to November 14. Experts explained what such actions of the regulator are connected with.
The American financial regulator The US Securities and Exchange Commission (SEC) postponed the decision on the application of the asset manager company VanEck to launch a Bitcoin ETF by 60 days, until November 14.
This is the third and final postponement, now the SEC will have to either approve or reject the application.
A Bitcoin ETF is an exchange-traded fund that will use Bitcoin as its underlying asset. Due to this, investors will be able to earn on the change in the value of the first cryptocurrency without working directly with it.
The listing application for the Bitcoin ETF was filed by the Chicago Board of Trade Options on behalf of VanEck on March 2.
Consideration started on March 18, but the decision was postponed twice – in April and June. The regulator collected additional comments from the public.
This is not the only crypto ETF launch application from VanEck. In August, the company submitted a proposal to the Commission to launch an exchange-traded fund based on a Bitcoin strategy.
This means that the fund will track the quotes of futures and other investment instruments, which are based on the first cryptocurrency.
The company tried unsuccessfully to present a similar product back in 2017. Then VanEck was forced to withdraw its application, because at that time there were not enough necessary instruments for its implementation on the market.
In the summer, three more companies submitted applications for this kind of Bitcoin ETF: ProShares, Invesco, and Wilshire Phoenix, which updated its application taking into account the recommendations of the regulator.
Bloomberg analyst Erik Balchunas wrote at the time that they might all be approved.
VanEck just filed for a “Bitcoin Strategy ETF” which will hold bitcoin futures and other bitcoin funds(just like Invesco’s last week). This is the 4th bitcoin futures filing under the 40 Act that Gensler signaled were more likely to be approved. pic.twitter.com/WOdYPID2OQ
— Eric Balchunas (@EricBalchunas) August 10, 2021
Over the past three years, the SEC has not allowed any company to launch Bitcoin ETF. Now big players are also submitting applications. For example, at the end of June, the regulator received an application from Ark Invest, founded by Katie Wood.
The document was drawn up jointly with the Swiss company 21Shares AG. And in March, one of the world’s largest asset management companies, Fidelity Investment, submitted an application to launch a crypto ETF .
The SEC is postponing a decision on applications for Bitcoin ETF, because there is no clear regulation of the crypto market and relevant laws, explained the head of the analytical department of AMarkets Artem Deev.
According to Artem , this tool “overtakes the current legislation”, and the SEC is obliged to work within the framework of the adopted laws and regulations.
“The fear of manipulation and speculation in the digital asset market is so high that the regulator itself is afraid of making any decisions so as not to be responsible for the consequences,” the expert emphasized.
He also noted that within the US authorities and regulators, there are different points of view regarding crypto assets.
Conservatives are pushing for a ban or tight restrictions on cryptocurrency , while others are proposing to take small, neat steps to give them more options. Because of this, the SEC is forced not to make any decisions at all, Deev said.
In July, SEC member Hester Pearce explained in an interview with CNBC that the financial regulator is imposing increased requirements on cryptocurrency related products, as this market is very different from other financial sectors.
Pearce noted that the growth of institutional investment has a positive effect on the prospects for the crypto market and its maturity.
The SEC fears the high volatility of bitcoin and the loss of funds by investors, said Maria Stankevich, Development Director of the EXMO crypto exchange.
At the same time, she recalled that there are ETF for other assets that are more volatile than Bitcoin. For example, the Direxion Daily S&P 500 High Beta Bear 3X Shares ETF has 60-day volatility ranging from 100% to 200% depending on the month.
“As for the loss of funds by investors and a large number of manipulations and fraud, I think the SEC knows very well that the presence of ETF will just speed up the process of clearing the market and help increase transparency in relation to cryptocurrency exchanges, since they will compete to attract professional market makers,” Stankevich emphasized.
She predicted that the approval of the application for the launch of a bitcoin ETF could become a catalyst for a sharp rise in the price of bitcoin and a positive informational reason for the transition t a full-fledged bull phase of the cryptocurrency market.
