By Bill Taylor, Fintek Capital
So, let’s just state the obvious, The US Securities and Exchange Commission (SEC) does not like Bitcoin. No, they actually HATE Bitcoin.
Last evening (Wednesday) the SEC rejected applications for nine separate bitcoin based exchange traded funds (ETFs), dashing the hopes and dreams of investors. With that decision the SEC showed its’ true hand by issuing three (3) orders, one for each application from ProShares, Direxion and GraniteShares. How did the SEC show its disdain for a bitcoin ETF? Well only the ProShares application for two funds were scheduled for a decision by today while the other applications were to be decided upon next month. The SEC basically said “why wait, since we will turn them down anyway”. No adjustments needed, we don’t want bitcoin ETFs on US soil.
The industry has been trying for years to introduce a bitcoin ETF product. The Winklevoss brothers began trying to introduce a bitcoin ETF about four years ago. Each subsequent application has tried to address the SEC’s concerns and improve the product. But now, even with big name support from industry leaders in the fund business, the CME Group and Cboe Global Markets (both have listed bitcoin futures), the commission just said don’t bother. It ‘ain’t gonna happen’.
The SEC again falls back on its’ concern that there are not enough protections against fraud and market manipulation in place and the markets are not of “sufficient size” to prevent price manipulation. The commission does say ‘nothing personal’, the rejection(s) don’t “rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.” OK, in other words, the commission doesn’t know how to regulate something (bitcoin) and until it does……….nothing happens.
Note to the SEC; why not do what they did when they allowed the CBOE to introduce listed options via a new exchange………..allow a ‘pilot’ program, on a limited basis, to analyze, understand and develop regulations? Just thinking.
But for now, bitcoin ETFs are not welcome in the US. Rest assured they will spring up offshore and develop, thus leaving the US further behind in revolutionary financial products. Oh well!
Bill Taylor is Managing Partner at Fintek Capital & a frequent contributor to FintekNews