Bitcoin today lost another large portion of its value when the Securities and Exchange Commission (SEC) delayed a vote on a Bitcoin-based exchange-traded fund (ETF). This would have been a first in the market and a huge step towards furthering mainstream acceptance of the digital asset after regulated markets introduced futures on BTC late last year.
This isn’t the first time someone has attempted to create a Bitcoin-based ETF and it probably will not be the last. This particular instance would have been pretty pricey, with each share costing $200,000. The seemingly outrageous price is reflective of the fund’s focus on institutional investors and not those of the retail variety. If the SEC voted for this today, the ETF had plans on launching sometime in Q1, 2019, bringing it to market quickly with momentum and investor interest.
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The market did not take this news lightly. Nearly all major Cryptocurrencies were down at the time of this writing, with Bitcoin sliding to around $6300. Considering a week ago today, Coinbase had Bitcoin at nearly $7600, the price fluctuating the way and the amount it does certainly cannot weigh lightly on the SEC, who previously has mentioned their hesitancy to consider many option products on or related to crypto as a result.
Dalia Blass, director of investment management at the SEC wrote in a letter, directed at the two US trade groups “We believe … that there are a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to retail investors.”
Blass continues “Would funds have the information necessary to adequately value cryptocurrencies or cryptocurrency-related products, given their volatility, the fragmentation and general lack of regulation of underlying cryptocurrency markets, and the nascent state and current trading volume in the cryptocurrency futures markets?”
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All of which are valid questions when a product moves over $1200 in the course of a week, can a company entirely based on crypto get that sort of liquid cash on hand for if it reverses? This is definitely a valid concern as well, especially since moves like this can happen daily, if not sometimes intraday.
The SEC leaves everyone in suspense yet again, with a lack of decision having nearly the impact as making a full decision.
