Will we see the launch of crypto ETF in the US next year?
It’s clear now that the initial optimism from the beginning of 2018 regarding the institutional crypto trading and the launch of crypto ETFs was premature. The 2017 crypto hype that catapulted the price of bitcoin to $20k was a result of expectations that the introduction of bitcoin futures will attract huge institutional demand. This however did not happen. One of the main obstacle was the set back on the launches of ETFs which were rejected by the SEC several times in 2018. Top banks of the world like Goldman Sachs, Citi or Morgan Stanley didn’t start trading cryptocurrencies although many of them invested in building the infrastructure around it so they are prepared if the time comes. The question is when…
Well the time
horizon could be a few months (when the SEC will have to decide whether to
approve the SolidX VanEck ETF) as well as it could take 20 years. Recently, SEC
commissioner Hester Peirce (a crypto ambassador inside the SEC) advised
investors on the Digital Asset Investment Forum not to hold their breath. As it
took a long time to SEC to establish FinHub (the agency’s Strategic Hub for
Innovation and Financial Technology) and it can take much longer to approve an
exchange traded product, according to cointelegraph.com. But despite it could
take years it’s possible that a Crypto ETF will be approved.
statements stated that the main reason behind the rejections of Bitcoin ETFs was
that the commissioners felt that it could not be sufficiently proven that the bitcoin
market is resistant enough to manipulation. However if you read the whole
statement of the rejection of the Winkelvoss ETF for second time, it appears
that the lack of regulatory capabilities at the underlying market, which is the
bitcoin market, is the main obstacle for the SEC not to approve the ETF.
The SEC recently posted online that the agency will extend the review period for the ETF of VanEck and SolidX to 27th February 2019. This ETF differs from the previous attempts as its value is dependent on bitcoin itself rather than futures market like the funds rejected in the summer. However a kind of Crypto ETF is already a reality in the developed world. Crypto based investment certificates in Scandinavia backed by direct crypto currency purchases are offered by the Swedish XBTPROVIDER and these certificates are exchange traded on the Stockholm Exchange.
Although these certificates are not ETFs but rather ETNs and they can’t be bought by US investors, this real example shows that the idea of Crypto ETFs in the US is not a science fiction and it’ll likely become reality… The big question is when. However if one has the patience and spare capital to wait, could harvest very nice profits at the end.