The SEC Is On Track For A BTC ETF
The SEC has just rejected another 9 BTC ETF applications from 3 top ETF providers; Direxion, ProShares and Granite Shares. The news is not surprising as these funds, like all the ones denied before them, fail to meet the SECs standard for safe investment. The reason is simple, these ETFs are all based on the price of BTC and the SEC has little to no control over international exchange mechanics.
The news is a shock to the market but ultimately doesn’t matter. The really important decision won’t come until next month at the earliest and next year in all likelihood. The SEC is expected to rule on another BTC based ETF at the end of September and it could be a game changer. This ETF, the VanEck SolidX BTC ETF, is unlike others before it and may pass muster in the eyes of US regulators.
To date, BTC ETFs have been based on the price of BTC, the VanEck SolidX BTC ETF will be based on the price of the BTC futures listed at the CBOE. This may seem like a fine hair to split but in the eyes of regulators the BTC future is listed on a US regulated exchange where it is less susceptible to price manipulation. Physical BTC’s are traded on open exchanges around the world and highly susceptible to manipulation.
Despite this cryptocurrency analyst Brian Kelly thinks it will be early 2019 before the SEC approves a BTC ETF. He says the agency is in the process of surveying the market, looking for potential pitfalls and the means to mitigate the. In my view it may take the launch of Baakt, a cryptocurrency exchange platform project that is in the works, to facilitate the kind of stability the SEC is looking for.
Baakt is a collaborative effort between Microsoft, Starbucks and the Intercontinental Exchange. The goal is to guild a US-compliant cross-token exchange and wallet system that would tie exchanges together. What it means for traders will be better price discovery, tighter spreads and lower volatility; what it means for the SEC is a way to monitor the market and provide safe trading.
Bitcoin is now trading near $6,500 and appears to be building a base. The caveat is that prices are contained by a key downtrend line that may hold prices back over the next few weeks. The good news is that support is close to hand and the narrowing range that has dominated prices all year is coming to a point; prices will have to break out one way or the other. Based on recent action it looks as though prices are well supported so a move to the upside is more likely than not.