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Bitcoin has been hitting headlines for the last one year, either for a good or for a wrong reason. It was the hottest trade in 2017 but has simply nosedived this year on overvaluation concerns, excessive red tape and several central banks’ warning about the currency’s worthiness.
Bitcoin’s price peaked in mid-December to more than $19,000 but the asset sent itself trending down after that. After a volatile ride this year, the cryptocurrency now hovers around $7,000.
As far as rolling out ETFs on bitcoin is concerned, several attempts were made earlier by issuers, but all in vein. Hopes were high about a probable bitcoin ETF debut this year, especially with Cboe Global Markets launching three bitcoin futures contracts on the Cboe Futures Exchange in December. But the U.S. Securities and Exchange Commission (SEC) poured cold water on all hopes early this year (read: No Bitcoin ETFs in 2018?).
SEC to Reconsider Its Decision?
As far as the latest developments are concerned, Cboe Global Markets, the first to bring about bitcoin futures, wants the SEC to permit cryptocurrency exchange-traded funds. After that,the Securities and Exchange Commission (SEC) said that it is mulling over a rule change that would let bitcoin ETFs to be listed on exchanges.
According to SEC, “the agency has started the process to approve or disapprove a change in its rules that allows two bitcoin ETFs to be listed on the NYSE Arca exchange.” These two ETFs are Proshares Bitcoin ETFs and Proshares Short Bitcoin ETFs.
Why Such Stringency?
Many analysts are issuing warnings about a bitcoin. SEC is wary about its extreme price volatility in cryptocurrencies and liquidity in bitcoin-related funds. Several central banks issued warnings against it.
Lately, the Reserve Bank of India issued an order saying that all entities under its regulation would have three months to severe ties with any cryptocurrency-related service. The order covers the nation’s banks, which will make it difficult for Indians to buy cryptocurrency.
RBI showed consumer protection and anti-money laundering efforts as reasons for such a crackdown. The State Bank of Pakistan also posed restrictions in crypto trading as these are “not legal tender, issued or guaranteed by the Government of Pakistan.”
China has also put an embargo on all domestic cryptocurrency exchanges from dealing with the renminbi last year. The Chinese government also clamped down on initial coin offerings (ICO). This year, China plans to carry out of rectifications in crypto regulations.
The Reserve Bank of Australia sees it as "speculative mania" and finds bitcoin more popular in the illegal economy, not among consumers. The governor of the Reserve Bank of New Zealand called it a "classic case" of a bubble.
If these were not enough, some fear that cryptocurrencies may be used to escape taxes, launder money or finance terrorism. Alphabet (GOOGL - Free Report) , Twitter and Facebook banned bitcoin advertisements to prevent scams. Google’s ban will come into play in June while Facebook banned it in January.
Will SEC Give Permission to ETFs?
Given the recent developments against the cryptocurrency, chances look feeble. Investors should also note that Cboe’s bitcoin futures, launched in early December, have thin trading volumes. So, if approved, bitcoin ETFs could see the same fate.
As of now, investors wishing for a bitcoin ETF, may play its underlying technology – blockchain – through Reality Shares Nasdaq NexGen Economy ETF (BLCN - Free Report) and Amplify Transformational Data Sharing ETF (BLOK - Free Report) .
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Will the SEC Finally Approve Bitcoin ETFs?
Bitcoin has been hitting headlines for the last one year, either for a good or for a wrong reason. It was the hottest trade in 2017 but has simply nosedived this year on overvaluation concerns, excessive red tape and several central banks’ warning about the currency’s worthiness.
Bitcoin’s price peaked in mid-December to more than $19,000 but the asset sent itself trending down after that. After a volatile ride this year, the cryptocurrency now hovers around $7,000.
As far as rolling out ETFs on bitcoin is concerned, several attempts were made earlier by issuers, but all in vein. Hopes were high about a probable bitcoin ETF debut this year, especially with Cboe Global Markets launching three bitcoin futures contracts on the Cboe Futures Exchange in December. But the U.S. Securities and Exchange Commission (SEC) poured cold water on all hopes early this year (read: No Bitcoin ETFs in 2018?).
SEC to Reconsider Its Decision?
As far as the latest developments are concerned, Cboe Global Markets, the first to bring about bitcoin futures, wants the SEC to permit cryptocurrency exchange-traded funds. After that,the Securities and Exchange Commission (SEC) said that it is mulling over a rule change that would let bitcoin ETFs to be listed on exchanges.
According to SEC, “the agency has started the process to approve or disapprove a change in its rules that allows two bitcoin ETFs to be listed on the NYSE Arca exchange.” These two ETFs are Proshares Bitcoin ETFs and Proshares Short Bitcoin ETFs.
Why Such Stringency?
Many analysts are issuing warnings about a bitcoin. SEC is wary about its extreme price volatility in cryptocurrencies and liquidity in bitcoin-related funds. Several central banks issued warnings against it.
Lately, the Reserve Bank of India issued an order saying that all entities under its regulation would have three months to severe ties with any cryptocurrency-related service. The order covers the nation’s banks, which will make it difficult for Indians to buy cryptocurrency.
RBI showed consumer protection and anti-money laundering efforts as reasons for such a crackdown. The State Bank of Pakistan also posed restrictions in crypto trading as these are “not legal tender, issued or guaranteed by the Government of Pakistan.”
Notably, South Korea, which makes up about 20% of global bitcoin trading, ordered 12 cryptocurrency exchanges to revise their consumer contracts (read: Bitcoin: 'Red Tape', ETF Filings & Withdrawal Explained).
China has also put an embargo on all domestic cryptocurrency exchanges from dealing with the renminbi last year. The Chinese government also clamped down on initial coin offerings (ICO). This year, China plans to carry out of rectifications in crypto regulations.
The Reserve Bank of Australia sees it as "speculative mania" and finds bitcoin more popular in the illegal economy, not among consumers. The governor of the Reserve Bank of New Zealand called it a "classic case" of a bubble.
If these were not enough, some fear that cryptocurrencies may be used to escape taxes, launder money or finance terrorism. Alphabet (GOOGL - Free Report) , Twitter and Facebook banned bitcoin advertisements to prevent scams. Google’s ban will come into play in June while Facebook banned it in January.
Will SEC Give Permission to ETFs?
Given the recent developments against the cryptocurrency, chances look feeble. Investors should also note that Cboe’s bitcoin futures, launched in early December, have thin trading volumes. So, if approved, bitcoin ETFs could see the same fate.
As of now, investors wishing for a bitcoin ETF, may play its underlying technology – blockchain – through Reality Shares Nasdaq NexGen Economy ETF (BLCN - Free Report) and Amplify Transformational Data Sharing ETF (BLOK - Free Report) .
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>