The Winklevoss Twins were first in the US to formally apply for an ETF (Exchange Traded Fund) before the SEC (Securities and Exchange Commission) which got rejected in March 2017. The pending approval drew the eyes of all the players in the crypto market. The price saw an immediate boost. However, the support for Winkdex to be an ETF fund tied to the price of Bitcoin was denied by the board.
There have been as far as nine ETF approvals that are pending with the SEC. There have been various meetings with the proposal makers and independent committees whose reports would be considered by the SEC.
SEC and Bitcoin ETF: The perennially pending proposal
The ETF is an investment fund like Mutual Fund, where the price of the ETF is dependent on the underlying asset which may be equity, bond, commodity or a combined portfolio of them. The ETF can be traded on the futures market where the price of the fund would fundamentally drive and be driven by the success of the Bitcoin network.
Furthermore, there is no definitive timeline that regulators have agreed to after which they would make their final decision. The proposals have been rejected multiple times since March 2017. However, the SEC has kept it under review after last time’s rejection on 22nd August 2018.’
How will the ETF approval affect the market?
The ETF approval is expected to drive the price of Bitcoin and also promote wide-scale adoption. An ETF approval in the US will have Bitcoin recognised as an asset equivalent to gold, bonds and equities.
Although the approval is apprehended to bring considerable fluctuations in the price of Bitcoin. The ETF fund would also regulate the price of Bitcoin for the better; due to increase in the volume of investors and the trading expertise of Wall Street, the move would bring stability and definiteness to the price of Bitcoin. The market will be expected to remain unaffected by the superficial news.
The ETF approval in the US which would bring US to the NYSE (New York Stock Exchange) is expected to be a game changer for the digital currency. Nevertheless, ETFs are nothing new for the cryptocurrency. XBT provider, a Swedish firm has offered ETF based on Bitcoin and Ether since 2015. In July this year, the largest ETF trader in Europe Flow traders NV, also expanded their portfolios to include cryptocurrency based ETFs.The ETF approval in the US which would bring US to the NYSE (New York Stock Exchange) is expected to be a game changer for the digital currency. Click To Tweet
What is Bakkt?Bakkt is a platform that is being launched by the ICE, it is the parent company of the NYSE (New York Stock Exchange). Microsoft and Starbucks are partners in the endeavour. Click To Tweet
Bakkt is a platform that is being launched by the ICE; it is the parent company of the NYSE (New York Stock Exchange). Microsoft and Starbucks are partners in the endeavour.
According to many cryptocurrency enthusiasts, the Bakkt platform would alienate the need for approval from the SEC and Bitcoin futures market could see existence in the US as early as 12th December this year.
How will Bakkt affect the price of Bitcoin?
The Bakkt platform will offer Bitcoin futures which will be settled on the same day with the physical delivery of Bitcoins. This is the first time institutional speculation would begin in the form of intra-day trading in the US. The ICE in its right when it introduces a futures contract arbitrarily on its own, this might come as a deviation to the law imposed by the SEC.
However, the regulatory authority over ICE that grants it the rights is CFTC (Commodity Futures Trading Commission), which can decide to shut down the fund. The result will be seen after 12th December when the platform is formally launched.
The Bakkt platform can give provide a simulation of the effects of the Bitcoin Futures on the cryptocurrency market, and it would also bring out the true sentiment of the people, informing the SEC and other regulatory authorities around the world.
The market will be tense and indecisive till then if Bakkt and SEC approval are the only catalysts affecting the market. The bear market has lasted for more than 40-weeks. The Bitcoin market has an average time interval of 89-weeks between successive bear and bull markets. The time internals has nevertheless decreased in the 2-3 years bringing down the average of pre-2015 crypto-era.