Bitcoin ETF Deadline Moves Further as SEC Asks for More Public Feedback

By Nilesh Maurya
Published September 21, 2018 Updated September 21, 2018
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Bitcoin ETF Deadline Moves Further as SEC Asks for More Public Feedback

By Nilesh Maurya
Published September 21, 2018 Updated September 21, 2018

The Bitcoin ETF application submitted by Van Eck and SolidX and the comment letters that the Commission has received on the application are still not convincing enough for SEC to approve a Bitcoin ETF. In the latest update received via SEC, the Agency is still not completely convinced that the price of the Bitcoin cannot be manipulated.

SEC asks for further comments on Van Eck- Solidx proposal

Despite already receiving more than 1,400 comment letters on a proposal to list an ETF from Van Eck Securities Corp. and SolidX Management, the Securities and Exchange Commission is inviting more feedback, the agency said in its new order which was issued with respect to the Bitcoin ETF.

Those who wish to comment have 21 days after the SEC’s order is published in the Federal Register, while rebuttals have 35 days from that date. The agency is seeking views on market manipulation — including whether Bitcoin is less susceptible to manipulation than other commodities that back exchange-traded products — as well as surveillance.

The fate of the application has been getting delayed time and again. The application was first filed on June 20th, 2018. On July 2, 2018, the SEC accepted it and published it in its federal register. With a deadline approaching the SEC, on August 7, 2018, designated a longer period within which it would decide whether to approve or disapprove the application. The SEC also opened up the application for comments by the general public and asked people to send comment letters in favor of or in denial of the application.

Also, read: This could be the Sign by SEC that Bitcoin ETF is Finally coming

CBOE puts up a strong case against Bitcoin price and market manipulation

According to the details given in the update Cboe BZX Exchange, Inc (termed as exchange) has presented some strong arguments and given its view as to why it is difficult to manipulate Bitcoin prices and markets. According to the exchange’s arguments, the geographically diverse and continuous nature of bitcoin trading makes it difficult and prohibitively costly to manipulate the price of bitcoin.

It also further states that the fragmentation across bitcoin platforms, the relatively slow speed of transactions, and the capital necessary to maintain a significant presence on each trading platform make manipulation of bitcoin prices through continuous trading activity makes the price manipulation further difficult. Considering these facts, the exchange concludes the Bitcoin market is generally less susceptible to manipulation than the equity, fixed income, and commodity futures markets. With respect to arbitrageur’s presence the exchange claims and as quoted in the update order,

“Moreover, according to the Exchange, the linkage between the bitcoin markets and the presence of arbitrageurs in those markets means that the manipulation of the price of bitcoin on any single venue would require manipulation of the global bitcoin price in order to be effective. The Exchange argues that arbitrageurs must have funds distributed across multiple trading platforms in order to take advantage of temporary price dislocations, thereby making it unlikely that there will be a strong concentration of funds on any particular bitcoin exchange or OTC platform. As a result, asserts the Exchange, the potential for manipulation on a trading platform would require overcoming the liquidity supply of such arbitrageurs who are effectively eliminating any cross-market pricing differences”

The SEC dragging the application is a clear sign that the SEC is still not completely convinced with respect to the price manipulation arguments. On the other hand, it doesn’t want to be the devil who would be termed to have killed the innovation and the future. It all seems clear that we would see an approval only once a federally administered exchange comes into the picture that SEC can trust. All eyes would now be on ICE’s Bakkt launch in November which is believed to comfort the SEC.

Will SEC take the Bitcoin ETF approval to Q1 FY 19? Do let us know your views on the same.

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Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Nilesh Maurya
689 Articles
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.

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