The U.S. Securities and Exchange Commission (SEC) once again rejected the bid by Tyler and Cameron Winklevoss to list a Bitcoin ETF. As described by the following Bloomberg article:
"In rejecting the Cboe’s proposal for a second time in 18 months, the SEC raised concerns about the reliability of trading and volume data for Bitcoin, according to a filing posted on the regulator’s website. The agency’s staff specifically called into question the ability of Bitcoin exchanges to sufficiently police trading."
This unfortunate rejection resulted in a quick dip in Bitcoin's price as it appears that many traders expected that the Winklevoss twin's bid would be successful this time around. See the following chart from the aforementioned Bloomberg article:
Any BTC related ETF could potentially be a serious driver of demand which could turn into a strong bull run for the cryptocurrency. In particlar, it could cause serious inflows from pensions and other huge retirement investments.
Next Up - Direxion!
The next SEC ruling on BTC ETF is for Direxion's leveraged bull/bear ETFs and is expected to be decided on by September 21st. Leverage ETFs exist by using proceeds to borrow money in order to gain extra exposure to the market. Direxion is already a big player in the area of leveraged ETFs and is attempting to bring their expertise to BTC.
However, it remains to be seen how they will do and how the passing of their ETFs would impact BTC's price. In contrast to the Winklevoss twin's ETF proposal, Direxion is attempting to create both long and short ETFs so it is unclear what an acceptance would mean for supply/demand.
A New Regulated Crypto Exchange?
On a related note, there has recently been news that a new fully regulated cryptocurrency exchange is launching this year. Of course, the decentralized nature of crypto is one of the reasons that makes it great, however, it also seems to be one of the biggest roadblocks in widespread acceptance.
Final Thoughts...
This causes me to wonder: could an exchange like this be the route to ETF acceptance and more widespread approval?
Let's say ETFs were restricted to only using regulated exchanges while everyone else could still use all the other exchanges or direct peer-to-peer trading.
Would the trade off between regulation in one corner of the market and more widespread usage be worth it?
My first thought is a 'yes' but I'm still processing a bit.
What do you think?
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