On June 26th, 2018, the Cboe submitted a Bitcoin ETF proposal to the U.S. Securities and Exchange Commission. In order to better understand the public sentiment, the SEC publically shared the submitted document with an invitation to comment.
The SEC’s request for comments was met with much interest; as 210 displayed comments on the SEC website was written between June 27th and July 11th.
Crypto enthusiasts and investors now eagerly await the SEC’s upcoming decision. Given that the SEC typically has 45 days to make a decision, it is expected that their announcement to approve, deny, or extend the decision-making period will occur around August 15th, 2018.
Of the 210 comments, it is clear that an overwhelming majority are for the introduction of a Bitcoin ETF. Only six contributors opposed the proposal.
The main argument for those against the Bitcoin ETF was the concern of widespread manipulation. One writer also worried about the potential problems with future quantum computing, while another saw alt-coins as a constant dilution of Bitcoin. One bold Bitcoin detractor suggested:
“Take an extremely high value short position on Bitcoin and bring the national debt to $0. I ask that you approve the request.”
From the positive majority of comments that supported the approval of the ETF, some common themes emerged:
- Bitcoin and other cryptocurrencies are here to stay.
- The United States must quickly adopt Bitcoin to remain at the forefront of technology and finance.
- Regulation would protect the millions of investors who already trust or are interested in Bitcoin and reduce/eradicate manipulation.
Here to Stay, Embrace It
Mike Fort, hammered the first point home, by quoting the words of U.S. Commodity Futures Trading Commission (CFTC) Commissioner Rostin Benham from June 4th.
“Virtual currencies may – will – become part of the economic practices of any country, anywhere. Let me repeat that: these currencies are not going away and they will proliferate to every economy and every part of the planet. Some places, small economies, may become dependent on virtual assets for survival. And, these currencies will be outside traditional monetary intermediaries, like government, banks, investors, ministries, or international organizations. We are witnessing a technological revolution. Perhaps we are witnessing a modern miracle.”
“These law-abiding individuals have decided that this decentralized digital currency is an asset to store and transact their wealth…The millions of Americans who believe in Bitcoin’s value should be afforded the same access and protections as other asset investors.”
In addition, other commenters cited China’s failed attempt to “shut down” Bitcoin and the fact that the network had never gone down, as further support of Bitcoin’s resiliency and long-term viability.
Building off that belief, commenters urged the SEC to consider Bitcoin seriously and to weigh the possible the ramifications of being a late adopter to the technology. While many people tried to spin it in a positive sense, reminding the SEC of the United State’s entrepreneurial spirit and its role as a global leader, others warned of the grim possibility of falling behind.
Jeffrey Bost wrote:
“With other countries like Japan, South Korea, Switzerland and Malta already taking positive regulatory measures towards institutionalizing crypto, the U.S. is at risk of losing its position as the global regulatory economy leader.”
Attorney Jeffery Exposito also commented, “If the U.S. doesn’t take the lead other countries like China and Russia will and the U.S. will be left behind.”
A third argued:
“In 10 or 20 years, the global balance of power will shift towards countries that have amassed the most digital gold (like Bitcoin). Approving this ETF will allow Americans to amass Bitcoin through their normal brokerage account. This will ensure America remains the #1 economy as the world shifts from legacy money to digital assets.”
In previous proposal rejections, the SEC cited concerns of widespread manipulation and security as two of the biggest reasons to deny a Bitcoin ETF. With security improving, as exhibited by the problem-free custodianship of Coinbase and the maturing know-how of the industry, the main hurdle left appears to be the accusations of manipulation.
While the SEC has cited this as a reason not to approve an ETF, commenters of the proposal argue that manipulation is the reason why the SEC should approve.
Alistair Milne, CIO of Altana Digital Currency Fund, commented:
“I view this as a chicken and egg situation. Until the regulated markets permit Bitcoin trading, then trading volumes will seek ‘offshore’ jurisdictions or those with more relaxed oversight. Having said that, the marketplace has dramatically changed in the past 18 months, with Japan and South Korea contributing significant trading volumes … both now fully regulated markets. China has shut down their domestic exchanges, and therefore much of the ‘zero fee’ trading has been shut off, reducing the ability for anyone to manipulate the market.”
In other words, regulation in other countries has been able to reduce this. By initiating this step, not only would those already invested in Bitcoin gain protection, but it would also open the market to countless other investors.
By being able to invest in Bitcoin through an ETF, anyone with a 401(k) could easily gain exposure to Bitcoin, while not having to personally store their digital assets. If Bitcoin ever reaches the astronomical heights predicted by many of the prominent Bitcoin bulls, that exposure would be great, for both the United States and its citizens.