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Bitcoin ETF: the Burning Question

12/13/2018
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While the Bitcoin exchange rate experience another devastating minimum, the total crypto market capitalization has been reduced to the record low 140 billion dollars.

There are various reasons for that, the elimination of mining pools, end of the year, not to mention Bitcoin Cash hard fork and cartel collusions. Many crypto-admirers are facing losses, while the haters of e-currencies are gloating triumphantly.

However, this situation presents some positive aspects to those who invest in Bitcoin, say crypto enthusiasts. Taking into consideration the opinion of the analysts, such an environment will come in handy for the market to reset unnecessary, random players, as well as to clean it up from unimportant and unsuccessful projects. Thus, the whole industry could be improved and get some new hopeful directions.

Besides, recently investors who gain profits working in the e-currency market are very concerned about the next thing: will the planned launch of ETF Bitcoin be performed in real life? And if it does, how will this event affect BTC rates?

Bitcoin (icon), ETF

What is Bitcoin ETF: Definition and Explanation

The term ETF in relation to the modern stock market means investment funds the shares of which can be traded on the stock exchanges.

Unlike ordinary shares, which are sold and bought only once a day after their rates are updated, ETFs can be used for trading at any time of the day. The price of an ETF is generally tied to an asset that has a high level of volatility and liquidity. Due to this feature, ETF rates can change significantly during the trading day, which makes them quite an effective tool for making a profit. The value of most exchange-traded funds that are present in today’s financial market is linked to such long-time assets as oil and gold.

A couple of years ago, in early 2016, the idea of creating an ETF the cost of which will be connected to the crypto coins rates appeared. At the heart of any digital currency ETF is a relatively simple mechanism of action. For a start, the organization acquires a certain amount of digital tokens, after which it issues valuable shares, the price of which is linked to the existing volume of decentralized coins. Because of the changes in the rates of cryptocurrency purchased by the company, the quotes of the issued stocks will also change.

Bitcoin (icon), Ethereum (icon), Ripple (icon), etc., ETF.

As for the crypto environment, the phenomenon of ETF is still precedential, since there are few examples of its application. Yet, there have already been discovered several ways to exchange a stock product for digital assets. One can just buy and store e-currency and then divide the shares among the fund members.

What Are the Best Bitcoin ETFs?

Freshly invented, the described idea of creating ETF for Bitcoin and other e-currencies seemed unrealistic to many users. It can be easily explained by the fact that the cryptocurrency market is tough to manage and much less to control. It has also prohibited the exchange-traded funds to work freely, as all their operations are strictly governed by the SEC regulatory organization – The United States Securities and Exchange Commission.

Despite this, in 2016 the first projects of ETF funds began to appear, wishing to bound their securities to the most widespread electronic coin – Bitcoin. Well-known investors and the owners of the Gemini crypto exchange, the Winklevoss brothers, were among the pioneers of Bitcoin ETF, the first applicants for the execution of BTC exchange-traded funds. A bit later, The Chicago Board Options Exchange (CBOE) submitted a similar pathbreaking application.

U.S. Securities and Exchange Commission, Securing Futures.

In late summer 2018, the USA SEC considered approximately twenty requests for the creation of BTC-related ETFs. The following organizations presented the most noticeable exchange-traded fund projects under discussion organizations:

  • VanEck and SolidX;
  • GraniteShares;
  • ProShares;
  • Bitwise;
  • Direxion.

What to Expect: BTC ETF News of Second Half of 2018

A few months ago, the SEC informed media that nine main proposals for the implementation of BTC ETFs were rejected. ProShares wanted to establish two Bitcoin exchange-traded funds; however, they were not approved. SEC also refused to launch five ETF funds from Direxion, and the same number of projects from GraniteShares.

All the cases mentioned above got rejection due to one particular reason. The participating organizations were not able to comply with the strict requirements of the American “Exchange Act." The latter represents the set of essential rules expected to stop deceptive actions regarding any security papers.

Talking about ProShares refusal, the SEC regulators also mentioned that there was no substantial evidence that could help to confirm BTC futures markets being large and active. In simple words, the ProShares exchange was not able to prove successfully that it possessed any effective means for preventing fraudulent activities.

Bitcoin, ETF.

Big shot in the American investment funds, Van Eck Associates Corporation together with the NY-based financial company SolidX Management submitted an application for the opening of ETF with Bitcoin in summer 2018 as well. The organizations called their collaboration VanEck SolidX Bitcoin Trust (VSBT) that was supposed to be linked to the CBOE.

Although the USA SEC had a presumable deadline of August 16 for deciding on this case, the regulatory organization took their time to ponder on the question up until the end of September. Another vital point, since the section 19(b)(2) of the “Exchange Act” makes it possible to postpone the conclusion for additional 180 days from the registration date, we won’t hear about it until 29th of December, 2018.

Jack Chervinsky, the lawyer of the Kobre & Kim company, mentions that another 60-day delay is also optional (after the assigned data). Thus, the deadline for the absolute and final decision of the SEC in relation to the VSBT request is set to be announced at the end of February next year (2019).

ETF Bitcoin News: Latest Tendencies

Last week, the major stock market of Switzerland – SIX Swiss Exchange – has accepted the listing of items to be sold through the ETP based on digital currencies.

Bitcoin, ETF, approved.

Similar to the Coinbase code, Amun lives on the rates of five best-known and widely applied cryptocurrencies of modern days. Hence, the adherents of Bitcoin invest in the established ETP and acquire a whole bunch of e-currencies, in the great accordance with all the appointed regulatory requirements.

Unfortunately, ETP approval won’t help anyhow to avoid the rest of the designed BTC ETF being rejected. Amun’s concept is really close to those of an exchange-traded fund. They allow both established investors and authorized retailer to put money in digital assets without the need to keep the assets retention and compliance requirements.

Although the acceptance of such ETP on the leading Swiss exchange is a progressive stage in the industry, The Grayscale Bitcoin Investment Trust one of the most remarkable representatives of ETP on the USA market.

Bitcoin ETF Rejected: The Lost Potential

It goes without saying that for the world of electronic coins, the establishment of ETF BTC is a key point, as it will considerably reduce the risks for corporate investors. Today’s cryptomarket capitalization is said to be around $200 billion. When some serious players join the scene, it will greatly increase this figure.

So what is the Bitcoin ETF meaning? BTC ETF is supposed to represent a fund where digital coins are the main asset. Simply put, such a fund will purchase bitcoins and sell its own shares – supported primarily by the e-currencies – to the investors. It will protect their assets, as they will avoid direct interaction with cryptocurrencies and exchanges. That is why the launch of ETF is a crucial step for the whole industry, potentially determining its future perspectives.

Taking into account the most precise predictions of cryptoanalysts, the establishment of Bitcoin-related ETFs will enlarge the market capitalization by an impressive amount of 500 billion dollars! Interestingly, cryptocurrencies prices have experienced a noticeable change in 2017 right after the initiation of Bitcoin futures. Speaking globally, an exchange-traded fund is far more important than the abovementioned futures, so we are only left to guess how much the market could grow due to this phenomenon.

Since the end of fall 2018, the US SEC has not officially approved any applications; the situation remains somewhat unclear. Is it probable that the companies addressing The Commission can affect the existing position? To strengthen the chances of BTC ETFs being endorsed, the exchanges must offer a convincing problem solution. The information about real BTC price cannot be completed only by regarding the environment of the digital currency and futures markets.

Bitcoin (icon).

Is There any Specific BTC ETF Date?

The lingering uncertainty affected the rate of Bitcoin: if in July it increased due to the anticipation for a response from the SEC, then from mid-August it began to fall again. It immediately reflected the atmosphere in the cryptocurrency community. Some analysts still assume that the initiation of bitcoin-based exchange-traded funds will occur and will boost BTC rates; others doubt that such funds will appear at all. Yet, what is the approximate Bitcoin ETF date?

Special mention should be made of the statements of employees of the famous Bloomberg Agency, who claim that the creation of such funds may not happen before 2019. At the same time, positive-minded experts argue that positive responses from the SEC can be obtained before the end of 2018. They support their point of view with the following reasons:

  1. Bitcoin is the most reliable kind of e-currency, which has been present on the market for almost ten years. It also features a high level of capitalization.
  2. In the USA, Bitcoin has been proclaimed as valuable as the securities. Hence, the SEC cannot call it “an unregulated digital asset.”
  3. In 2017, SEC approved the establishment of BTC futures.
Bitcoin, exchange-traded funds.

Who is right, and who is wrong – it is impossible to tell for now. Yet, if we take into account the legal approval of bitcoin futures, as well as the high level of popularity of Bitcoin among the users around the globe, the odds for the BTC ETFs appearance in late 2018 are very high. Moreover, the official information in regard to this topical issue mentions the period of early spring of 2019.

Optherium Review: The Main Goal

Disregarding the present situation developing around the crypto-based ETFs and chances of Bitcoin going public, the area of digital finances expands and develops day by day. One of the pressing and highly discussed topics is the emergence of Optherium. It is the organization offering numerous financial services and beneficially combining fiat money with e-currencies, making it easy for single users and entire businesses to obtain desirable profits.

The blockchain, being an innovative technology that holds such rich potential for finding life-improving answers in different fields of our existence, has immediately attracted the Optherium founders. The company even have organized a research team for the implementation of the blockchain-based complex solution. Finding a comprehensive settlement in the area of international economics, which will successfully operate with two different worlds – real money and crypto coins, – is the primary goal of Optherium.

Optherium.

The major goal of this project is to set up convenient, private distributed computing networks using which users will effortlessly exchange their digital assets. By doing so, Optherium hopes to tackle the problems we face nowadays in financial and technological aspects of our lives.

To sum it up: yes, Bitcoin ETF was rejected. Why? There are indeed some solid-based reasons for that. However, with the appearance of Optherium ecosystem, e-currency investors and aspiring crypto users have got some sort of safety cushion.

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