2019 looks promising with interesting decisions and events that will shake the market and completely transform its landscape. An ETF is a marketable security which tracks a stock index. ETFs and different from mutual funds because share trade like common stocks on an exchange. They have several advantages such as tax efficiency, low fees, buying and selling flexibility, lower costs and transparency.
A recent survey made by the Bitwise Asset Management corporation states that:
We recently commissioned a formal survey of 150 financial advisors, and a strong majority — 58% — said that an ETF would be their preferred way to invest. When asked what would make them more comfortable allocating to crypto in client portfolios, 54% said “better regulation” and 35% said “the launch of an ETF.” This holds true for many family offices and institutions as well.
An ETF will allow people to buy and sell Bitcoin in their financial account with increased simplicity and trust rather than having all the struggle to create an account at a crypto-exchange or other less known platforms. The most recent Bitcoin exchange-traded fund (ETF) was proposed by the crypto-startup Bitwise Asset Management, which states that will address the regulatory concerns that previous attempts had, counting with very experienced people in the ETFs space.
Bitwise wants to use its Bitcoin Total Return Index for the valuation — with spot prices from exchanges and physically settled futures contracts — like the most recent VanEck/SolidX ETF proposition. They also differ from other offerings by having a regulated third-party custodian responsible for trusty storing Bitcoins.
Everyone was positive-biased towards an ETF acceptation by early this year but recent events delayed, once again, that increased expectancy. With the recent USA government shutdown, with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) being closed, all the possibilities of any progress in the regulation and proposals analysis seem to vanish in thin air. Also, as a result of those obstacles, even the main ETF proposal withdrew until further notice.
One interesting fact from one of the CNBC commentators is the that we are still trying to understand the real value/price of Bitcoin and only a few months ago have we started to hear the SoV narrative. The main reason for the withdrawal is the fact they can’t keep conversations with SEC. Therefore, a logical decision of withdrawing and “stop wasting time without any progress” was made.
No reaction from the market just shows that this event was already priced in. The deadline before the withdrawal was 27th February and, with this new re-fil, they earned more time to work in their application. This time, they made some modifications countering some of the SEC concerns.
The clock will start when the proposal gets published in the Federal Register and, assuming that that happens soon, we are looking into a final deadline by early October.
The day a Bitcoin ETF is listed it will be a very bullish milestone for the market but is important to acknowledge that it is just the first door opening for institutional and professional investors, as they will spend some time to research and evaluate the market before recommending an investment to their clients.
Even if all these propositions get declined, this will be very helpful for the market as these reputable companies are working together with the regulatory entities to trace a good path for future crypto products. We will see a lot of products from reputable financial companies coming to the market as soon as the regulation becomes clear.