The regulators are analyzing at least 11 requests to approve that type of fund. Following the crash, Canadian ETFs issued alerts for the existing “market disruption.”
In recent days, the US Securities and Exchange Commission (SEC) again refused to authorize Bitcoin exchange-traded funds (ETFs). One of the reasons for rejecting the requests from mutual funds and managers could be the recent crash in the cryptocurrency market.
Jake Chervinsky, a lawyer and advisor to the Compound Finance platform, defends the hypothesis that the SEC made this decision. The executive considers that the resounding collapse of last week would be an ideal argument to reject the applications.
“The speed and seriousness of the drop is an easy excuse for the SEC to reject Bitcoin ETF proposals this year. Price action seems to drive the trading of derivatives on unregulated offshore exchanges, which has worried the SEC from the start. Although I am not ruling out an ETF yet, the chances are low,” Chervinsky explained.
The regulatory specialist believes that the SEC would not approve a Bitcoin ETF without trade monitoring of “regulated markets of significant size.” According to Chervinsky, the market crash was evidence that unregulated markets are still the most important.
Bitcoin ETFs Must Go Along a Thorny Path
The SEC has rejected and postponed decisions on Bitcoin ETFs for years. The market crash would not be the only scenario keeping the commission from approving such an instrument.
The crash in prices shook the recently approved Canadian Bitcoin ETFs, forcing their managers to issue alerts. The SEC would not approve the trading of these funds due to these types of situations.
The Securities and Exchange Commission is currently looking at around 11 applications for Bitcoin ETFs. This financial instrument could open the doors to the pioneering cryptocurrency among US retail investors. The SEC’s rejection of these funds has affected the price of the first cryptocurrency in the past.
The most recent case of requests for ETF approval is from investment manager VanEck. However, the US regulator postponed this decision until next June. The waiting list also includes Galaxy Digital, Grayscale, New York Digital Investment Group (NYDIG), and investment bank Morgan Stanley.
These companies hope that the new Chairman of the SEC, Gary Gensler, will change the policy that the regulator has maintained. In this way, the official would begin to approve these investment products in the United States. He has received training in new technologies and has called Bitcoin “the new form of gold”.
US regulators have been concerned about Bitcoin and other cryptocurrencies because of their anonymity and decentralized nature. The authorities fear that these types of assets facilitate illegal activities such as money laundering and terrorism financing. For that reason, they have always sought to regulate their use in the US territory.
Unlike what happens in the United States, Canadian operators of the Toronto Stock Exchange are already trading Bitcoin ETFs. In fact, the launch of an ETF for Ether, the Ethereum network’s native cryptocurrency, was already underway in February.
By Alexander Salazar
