The new Bitcoin boom in the markets could tip the balance in favor of Bitcoin. The presence of investment bank Morgan Stanley could generate confidence in regulators.
Many companies in the cryptocurrency ecosystem have sought approval for a Bitcoin exchange-traded fund (ETF). For years, they have submitted applications to the US Securities and Exchange Commission (SEC), but no avail.
The New York Digital Investment Group (NYDIG) recently requested authorities to analyze a new ETF proposal. Investment bank Morgan Stanley is one of the authorized participants, raising hope for possible approval.
In recent days, the NYDIG submitted Form S-1, which includes a preliminary prospectus for the potential mutual fund. Curiously, it would bear the name NYDIG Bitcoin ETF, although it does not yet have an identifying ticker, and Bancorp Fund Services would manage it.
According to the document, the NYDIG Trust Company would be the custodian of the fund’s Bitcoin, and only authorized participants could invest. The sponsor (NYDIG Asset Management) would receive as payment a unified annual fee of 0.50% in compensation for its services. If the ETF receives approval, it would be listed on the NYSE Arca, an affiliate of the NYSE Group.
“To achieve its investment objective, the trust will hold the bitcoins. The fund will value its assets daily under Generally Accepted Accounting Principles (GAAP), which value Bitcoin. They will do so by reference to ordered transactions in the main active Bitcoin market,” says the prospectus.
Factors that Will Determine the Approval of the Bitcoin ETF
This request for the creation of a Bitcoin ETF fund contrasts with those that other entities have made previously. On this occasion, several elements could tip the balance in favor of NYDIG and Morgan Stanley.
First of all, there is a wave of companies that are investing in Bitcoin and incorporating it into their treasuries. Increasing regulation of cryptocurrencies on a global scale could also favor approval. The expansion of blockchain analytics and compliance companies like Chainalysis, CipherTrace, and Elliptic is another important factor.
Bitcoin’s bullish run and its historical prices are increasingly attracting the attention of the media. Furthermore, financial superintendencies, banks, and even payment processors are already designing business models around Bitcoin.
The SEC authorities could see this push as an increase in the legitimacy of Bitcoin. SEC Commissioner Hester Peirce believes that they were prepared for such a product to go public.
The agency defines an ETF as a group of investment companies that offer a way to pool investors’ money. To do this, they have a fund that makes investments in stocks, bonds, and other assets or some combination of these investments. By way of compensation, investors receive interest generated from said group of investments.
Canada has already gotten ahead of the United States with the approval of the first ETF in North America. Canadian firm Purpose Investments said that regulators had given them the go-ahead for a Bitcoin ETF.
Currently, there is another active application before the SEC for the creation of such a fund. None other than VanEck Associates Corp is the one who has sent that request.
By Alexander Salazar