Since 2017, SEC has turned down at least three bitcoin ETF applications (including the Winklevoss twins on two occasions) from different groups citing specific reasons for such denials. This has not stopped the surfacing of new applications. Just last month three groups that have been turned down before (CBOE, VanEcK and SolidX) returned with revised applications.
This latest development has reignited the influx of opinions and predictions to how necessary the ETF is to bitcoin and the possible effects of any form of approval of such. While some experts do not see the necessity of an ETF for bitcoin, others believe that is will be a major catalyst for the next big move and possible establishment of the cryptocurrency in the mainstream.
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Here are the opinions of a few experts who told CCN how much they believe an ETF will affect the development of bitcoin.
An Interesting Idea
Founder of Netcoins, Michael Vogel sees the possibility of a bitcoin ETF as “an interesting idea” even though he does not think that such is crucial to bitcoin’s long term success.
According to Vogel, many see an ETF approval as another step forward to legitimizing bitcoin in the eyes of Wall Street and the world of traditional finance because it would ultimately put bitcoin (as a trading instrument) in the hands of conventional traders. However, he believes that it would also denote a significant step forward in terms of the comfort level that regulators display around cryptocurrency, given the extreme hesitancy around past ETF applications.
“A large ETF would likely have a significant impact on bitcoin prices as well, not just due to trading volume but simply because of the volume of bitcoin that it would remove from the liquid trading market (because the BTC would need to be permanently held by the ETF corporation)”.
Absolutely Not Necessary
Another expert who aired her view on the developing event is the founder of Trezor and business strategy advisor for crypto companies, Alena Vranova.
In Vranova’s opinion, an ETF is absolutely not necessary for the development of bitcoin. However, she notes that it will open doors to a substantial mass of new investors who believe that some kind of regulatory approval makes bitcoin legitimate. Vranova indicates that in the short-term, bitcoin will benefit from a positive publicity and the price will probably skyrocket, even as she advised hodlers to ensure the security of their coins.
“Everyone who wants to hodl on, please make sure your bitcoin is safe against hackers, because their interest will skyrocket too. I’d recommend to abandon any custodian service, set up some of the proven hardware wallets (TREZOR or Ledger), set up a non-custodian multisig wallet (such as CASA) and read Pamela Morgan’s book on crypto asset inheritance.”
For Dana Coe, Partner at CryptoCrest, an ETF is simply any fund (mutual, hedge, whatever)traded on a listed exchange.
He explains that ETFs are mostly trading SEC- or CFTC-regulated assets and, right now, many or most cryptos are neither. Consequently, a fund trading them would have to register its shareholders’ interests in the fund as securities but the traded assets are unregulated. This may add to the reticence of the SEC to allow such a thing.
Coe continued by noting that as far as the importance of an ETF to bitcoin, what would really be a good way around is for funds that use large broker-dealers to sell membership interests in whatever fund type they have. So it wouldn’t be an ETF, but the funds themselves could have their membership interests be bought through Vanguard or similar.
“In the end that’s how it works anyway – difference being they aren’t listed on an exchange,” concluded Coe.
While the ecosystem awaits the new September appointment by SEC in making a decision on the ETF applications, investors and other bitcoin users will continue to ponder on both the long- and short-term effects that may arise. No matter the outcome, the increase in awareness and interest in bitcoin is becoming more certain. Also, with the various development across the entire blockchain ecosystem, improved robustness and industrial stability is becoming more obvious.