I have been paying careful attention to the banks developments in regards to crypto investing basically because this could potential tap trillions of liquidity into crypto. A chart developed by statista shows 6 banks below total assets in management as of 2020. Combine it is close to $20 trillion. This does not even include all the major US banks such as Goldman, Bank of America, and JP Morgan.
No Crypto ETF...
Where lies some hurdles as to how these institutions can get involve in crypto one piece is the Security Exchange Commission (SEC) unwillingness to provide trading vehicles to trade crypt. An exchange trade fund is a type of vehicle medium for speculators and investors that allows ease of trading. As of today SEC has yet to approve a crypto ETF. There has been multiple companies and banks submitting applications for creation of an ETF since 2013 and the SEC has shot all of them down.
2021 with the tail wind behind crypto prices more banks have filed applications for a crypto ETF including the likes of Fidelity, Morgan Stanley, and even Grayscale.
Why SEC is against crypto ETFs
The main concerns are lack of trading volume and fear of manipulation. To the SEC there still seems to be the belief that crypto can not be valued at current evaluations but yet we have hundreds of exchanges and over a $2 trillion market cap based off of coinmarketcap.com's latest numbers. There are also side chains that has yet to be included in the market cap, but all in all there is a proof a ton of liquidity in cryto exchanges.
On the front of manipulation it is understandable due in part there are whales in every token/coin that has the potential to sway coin prices in their favor. Yet throughout trading it is clear that big banks have a ton of control on assets as they write and create certain rules when it comes to trading in the stock market. My sense is that due to the fact banks are late to the crypto investing the SEC is not approving an ETF because they are waiting for banks obtain enough of a token/coin supply to have a whale like control. That way banks can manipulate prices as they choose and hence have some sense of control. For those who trade and invest for a living know well enough that stock markets there will always be people in the know and hence the game is rigged.
Right now crypto is not in banks control and so SEC is awaiting for when banks can amass enough of the top coins by market cap to say otherwise.
SEC potential of approving a crypto ETF today in 2021?
With all the hurdles and thoughts brought out one may think it will still take many more years before an ETF for crypto can be created. However the current SEC commissioner Hester Pierce is opening up about SEC's requirements in order for an ETF to get approved and is leanant than his former boss, Jay Clayton, whom stepped down as SEC commission at the end of 2020.
With a new leader in the SEC there is some positive news that a crypto ETF can be given the green light now more than ever before.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
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