CRYPTO MOVERS AND PRICES
CRYPTO STORY OF THE DAY
This Week VanEck And Solid X Withdrew Their Application With The SEC To Launch A Bitcoin ETF - While The Quest To Offer An ETF In North American Has Been Unsuccessful, We Believe Its Importance Is Overestimated And Other Products Will Emerge To Serve The Same Purpose.
With this withdrawal, only two ETF proposals remain with the SEC: one filed by Wilshire Phoenix and one from Bitwise Asset management. The former product proposes to create an ETF that dampens volatility through the fund holdings being composed of the vast majority US Treasury Bills and only a small percent bitcoin. The latter is a relatively straightforward proposal but was accompanied by a now well-circulated informational presentation. The deck attempts to dispel what Bitwise characterizes as misconceptions about crypto-market liquidity [note an updated presentation was released recently - see Open Source Research]. In a tweet following the news, VanEck director of digital strategies Gabor Gurbacs tweeted that a, 'liquid and insured [bitcoin] ETF remains a top priority,' leaving the door open for reapplication.
#1 It seems fair to say that the SEC does not want or is not ready to oversee a bitcoin ETF. The Commission has offered a slew of justifications, some of which are impossible for an ETF provider to fix on their own (such as the market structure of crypto itself).
#2 We believe that the investment adoption an ETF would facilitate can be manifested with other products. Retail investors, for example, make up by far the largest segment of investment in the space without having had an ETF.
#3 It may be more fundamentally strong for those investors to go through the process of getting a wallet and buying physical crypto so they may one day spend it and not just speculate.
#4 In terms of growing institutional investor adoption, in traditional finance, OTC and listed derivatives markets are far larger and more frequently utilized than ETFs. So to say that institutional investors would require an ETF to participate seems to lack precedent. Ultimately, while an approved ETF would be a positive headline for sentiment, we do not think it is necessary for bitcoin and crypto to see broad-based investment adoption.