There Remains a Case for a Bitcoin ETF, Says Industry CEO
For years now, cryptocurrency financial services firms across the U.S. have been trying their hand at issuing publicly-traded Bitcoin funds (ETFs).
Though, as many readers likely well know, said firms haven’t been too successful in their ventures, with the U.S. Securities and Exchange Commission (SEC) citing concerns about the underlying validity and security of the crypto market.
Despite this, some still believe that Bitcoin deserves its own U.S.-tradable, regulated fund. David Weisberger, co-founder of CoinRoutes and a veteran of the financial industry, recently published an op-ed to CoinDesk explaining why he thinks this is the case, and why the SEC is wrong in holding the Bitcoin market to such high regard.
SEC Wrong in Denying Bitcoin ETFs
Weisberger pointed to “three main flaws” in the SEC’s analysis of the Bitcoin markets, the latest of which was published in October to deny Bitwise’s ETF, to back his reasoning that there remains a case for a Bitcoin ETF. The three flaws are as follows:
- There exist an array of regulated Bitcoin and cryptocurrency exchanges; there is no proof of there being “fake” trading being done at said platforms, with fake trading being something the SEC continually cites as a concern.
- The SEC approved funds for gold, silver, and other commodities, namely precious metals, even when “the underlying spot markets are demonstrably inferior to bitcoin.” He noted that with there being regulated futures markets for Bitcoin, ” it is hard to understand the SEC’s logic in stating that there is insufficient price discovery from those futures markets.”
- And lastly, commodities with ETFs get bombarded with manipulation allegations, “so it seems like the SEC is holding bitcoin to a much higher standard.”
You Sure About That?
Weisberger’s remarks come in stark contrast to that of Thomas Lee, the co-founder of Fundstrat Global Advisors and a noted Bitcoin analyst. Per previous reports from this very outlet, Lee said at an industry event in Singapore that he thinks that for an ETF to be approved by the SEC, the underlying Bitcoin market will need to be much bigger, at least 16 times larger than the current size. “He estimates Bitcoin needs to be around $150,000 to cope with daily demand on an ETF,” Bloomberg wrote on the matter.
To put this in layman’s terms, the Fundstrat executive thinks that the underlying spot market for Bitcoin does not have enough liquidity to satisfy the SEC.
Lee’s comment came hot on the heels of a similar one from Todd Rosenbluth, Director of Mutual & Exchange Traded Fund Research of markets research firm CFRA. Rosenbluth asserted that a Bitcoin ETF remains a quixotic dream at best:
“It’s not the wrapper, it’s not the ETF product that’s the concern, it’s the underlying asset that the SEC is worried about from a fraud standpoint. They don’t want to pull off that band aid too quickly.”
Bitcoin ETF Not Needed
While many assert that there remains a case for a Bitcoin ETF, which would do wonders in opening up this market to institutional players, it may not be needed. At least not yet anyway.
Per previous reports from Blockonomi, Fidelity Investments — a financial services giant that has trillions, literal trillions, worth of assets under management — recently secured a trust license from the New York State Department of Financial Services (NYDFS). This license will give Fidelity’s cryptocurrency branch the permission to launch a cryptocurrency custody and trade execution platform for institutions and individual investors for New York residents — which is notable as this is where much of American wealth is managed, traded, and such.
Although the platform isn’t the same as a Bitcoin ETF — obviously — it has a good likelihood of having a similar effect on the level of institutional capital flowing into the cryptocurrency markets.
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