SEC remains skeptical of Bitcoin ETFs, VanEck-SolidX BTC trust met with disinterest
SEC chairman Jay Clayton remains cautious about approving a Bitcoin exchange-traded fund.
“Work left to be done”
The industry is making a lot of progress toward a Bitcoin ETF, said SEC Chairman Jay Clayton in an interview with CNBC’s Bob Pisani. However, there is “work left to be done” to address the agency’s concerns with market manipulation, market surveillance, and custodial services.
“How do we know that we can have custody and have a hold of these crypto assets? That’s a key question. An even harder question given that they trade on largely unregulated exchanges, is how can we be sure that those prices aren’t subject to significant manipulation?” asked Clayton.
Before the agency feels “comfortable” approving a Bitcoin ETF these issues must be resolved, added Clayton. His comments come as the final ruling for three of the most prominent BTC ETFs approaches. Though, given past history, they’re likely to get delayed again.
On Sept. 29, the U.S. Securities and Exchange Commission is scheduled to make a final decision on Wilshire Phoenix’s Bitcoin exchange-traded product proposal.
This ETP is meant to hedge Bitcoin with Treasury bills to fight volatility, which is one of the SEC’s largest concerns. As a result, the Commission may be more inclined to approval since the fund has better control over volatility, according to Wilshire Phoenix founder and managing partner Bill Herrmann.
“Volatility is certainly something the commission has noted as a concern in the past. I think we successfully hit that,” added Herrmann.
Additionally, the rulings for the Bitwise Asset Management and the VanEck-SolidX Bitcoin ETFs are set to happen on Oct. 13 and Oct. 18, respectively.
But, the SEC has thus far been consistent at postponing a decision on these Bitcoin ETFs. Bitwise Asset Management went to great lengths to address the SEC’s concerns, presenting a detailed market report.
Famously, the report claims 95 percent of all reported Bitcoin trading volumes (among other coins) are faked and that actual average daily Bitcoin trading volume is a much smaller $270 million (compared the reported $10+ billion). That said, the report ultimately concludes the Bitcoin markets are efficient and less susceptible to manipulation than what public perception would imply.
Lackluster interest in “limited” BTC ETF
Meanwhile, VanEck-SolidX found a way to circumvent SEC regulations using an accredited investor exemption. The firm recently launched a limited version of their originally planned Bitcoin ETF, only available to accredited investors, dubbed VanEck SolidX Bitcoin Trust 144A Shares.
Thus far, the ETF has accumulated an underwhelming $41,000 since launch, equivalent to 4 BTC. Even though the new financial instrument was met with tepid reception, Gabor Gurbacs, digital asset strategist and director at VanEck, is optimistic about the upcoming Bitcoin ETF rulings:
“I believe the Bitcoin ecosystem is slowly maturing toward supporting institutional quality products,” said Gurbacs.
If the SEC finally does make a ruling that approves Bitcoin instruments for non-accredited investors then that could really move the cryptocurrency markets.