The bitcoin ETF is arguably the biggest news in the cryptocurrency industry thus far in 2018. If a bitcoin ETF came to pass, then it would mean a deluge of new investment, opening the floodgates to bitcoin exposure on a scale never before seen.
No bitcoin ETFs have yet been approved by the SEC, and the two companies behind the bitcoin ETF have had individual applications previously shut down before joining forces.
High probability of approval
According to ICO Journal, the bitcoin ETF has a 90% chance of approval, citing a CFTC official who stated that –
I would call it 90% at this point. The crypto markets have moderated and regulators have watched the lack of drama surrounding Bitcoin futures across several global exchanges…. In January we were justifiably concerned about a bubble and the harm a quickly approved product could attract speculators and create losses that led to significant lawsuits. Now, those factors seem to be mitigated significantly.”
A further source of an SEC official also indicated a positive outcome, using less optimistic and specific language. Additionally, the SEC has opened the topic and has taken in public commentary, which has been over 97% positive, as previously reported by Crypto Disrupt.
The bitcoin ETF origins
The bitcoin ETF was unveiled in June and is called the VanEck SolidX Bitcoin Trust ETF (XBTC). The ETF sponsors are Van Eck (asset management) and Solid X (blockchain). The product will track an index linked to bitcoin trading desks. Though the fund will increase exposure, it is still targeted at institutional investors with a share price of $200,000.
But if this ETF is given the green light, then more bitcoin ETFs will soon come to the market. If approved, the product will most likely be listed on the Chicago Board of Exchange (CBOE).
A potential cause for concern raised by a very small number of commenters is that if the bitcoin price is indeed manipulated, then a bitcoin ETF linked to specific bitcoin trading desks would exacerbate the problem. The CBOE was the exchange where bitcoin futures were first launched when bitcoin was at its peak in December 2017, before starting its downward spiral.
So what’s an ETF?
An ETF (exchange traded fund) is a security that tracks another fund, such as an index fund, or any basket of assets. It trades like a stock on an exchange, with higher liquidity and lower fees. Lower fees, higher liquidity, and market access mean that a bitcoin ETF would make cryptocurrency accessible to a much larger audience. The product would also be insured against theft, fraud, and loss.
Shareholders in an ETF do not directly own the underlying instruments but have a form of indirect ownership. They are entitled to a percentage of the profits on the underlying assets appreciation.
While it is commonly believed that August 10th is the deadline for approval, the final decision will likely not be made on this date, and the earliest the decision will be announced is August 16th.
But all of the signs are pointing towards regulatory approval, and it is now a question of when, not if. It is more positive news in the crypto sphere, alongside a market bull run.