Bitcoin

SEC Bitcoin ETF Decision Looms, Prices Soar

Officials from the U.S. Securities and Exchange Commission (SEC) reportedly met with the Winklevoss twins on Feb. 14, said Bloomberg, to discuss their proposal for a bitcoin exchange–traded fund. The SEC has until Mar. 11 to reach a decision.

SEC approval could be a major milestone in the journey toward bitcoin legitimacy. Additionally, it could flood the bitcoin ecosystem with additional cash. Some $300 million could flood the bitcoin ETF during its first week, Spencer Bogart, head of research at venture capital investor Blockchain Capital, was quoted as saying in an interview.

Already, the prospect of a bitcoin ETF has investors betting big on the digital currency. At the time of writing, bitcoin’s market cap was currently well over $20 billion, and its value had risen to $1,270.23, up 3.27 percent from Wednesday (Mar. 1).  As bitcoin rose, TechCrunch noted that the value of 1 BTC had actually surpassed the value of a troy ounce of gold — the go-to alternative asset.

The Winklevoss twins’ Bitcoin Trust is just one of three proposed ETFs that could track the value of bitcoin. The irony here, of course, is that notions of cryptocurrency began as a means to decentralize value stores to sidestep institutional oversight. How bitcoin will fare if and when introduced to the market is anyone’s guess for now — though experts have raised some concerns.

Some are worried, for instance, about security risks surrounding a bitcoin-based ETF given the cryptocurrency’s rocky history. In February 2014, Mt. Gox shuttered its business after a mysterious “glitch” caused some $500 million worth of bitcoin to go missing. Most of those bitcoins have never been recovered.

Others simply don’t think bitcoin fits the ETF mold.

Ben Johnson, director of global ETF and passive strategies research at Morningstar Inc., was quoted as saying in an interview,“Bitcoin is not a stock, it’s not a bond, it’s not a hard asset like precious metal, it’s not a commodity future. It’s a technology that’s very much in its infancy, and it’s not something that in my mind lends itself to being packaged as an ETF.”

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