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Abra CEO Blames Biased SEC Process for Bitcoin ETF Rejection

Bitcoin (BTC), Exchange-Traded Fund—While the crypto markets exhibit continued price volatility, the industry focus remains on how the U.S. Securities & Exchange Commission will handle Bitcoin Exchange-Traded Funds going forward. While the SEC has thus far rejected all ETF proposals, the language in the rejection has given the industry some hope in the fact that the regulatory firm recognizes the growing potential of blockchain—just not the current iteration to produce an ETF. While analysts, industry forecasters and outside pundits weigh in on the reasoning for continued ETF denial, from the format of the proposal to the companies submitting them, Abra’s CEO Bill Barhydt has a different taken on the reasoning.

Abra, a cryptocurrency payment platform and app-based exchange, is not among the current crop of companies vying for the position as head of the first approved Bitcoin ETF. However its founder and CEO Bill Barhydt’s background on Wall Street has given him greater insight to the inner-workings of the SEC and led him to conclude that cryptocurrency is largely suffering from an image problem. Speaking in an interview with CNBC , Barhydt states that he does believe a Bitcoin ETF will reach approval stage by the SEC before year’s end, but the current holdup is being driven over a lack of familiarity between the regulatory group and crypto industry. Specifically, Barhydt cites that the cryptocurrency exchange leaders that are submitting applications for ETF-approval “don’t fit the mold” of the typical executive that the commission has historically dealt with.

As much as the SEC has given reasoning for rejecting thus-far submitted ETFs, which have all received similar language in the denial reply, Barhydt blames personality and industry profile for being at the heart of the problem. Essentially, the crypto industry does not fit the mold created by typical Wall Street interaction—a feature that could continue to cause delay in receiving approval,

“I think the issue with the SEC, quite frankly, is that the people who are doing the applications don’t fit mold of who the SEC is used to approving. I used to work for Goldman Sachs, but if you look at how I’m dressed you probably wouldn’t know it. So I probably, unfortunately, couldn’t go like I am here to a meeting at the SEC to say I’m applying for the ability to issue an ETF.”

In August, Gemini cryptocurrency exchange founders and high profile investors Tyler and Cameron Winklevoss’s bid for a Bitcoin ETF was rejected along with several other applications. VanEck, which has been at forefront of the ETF process and is favored to be the first to receive approval, had its proposed application delayed until the end of this month. In all, the crypto markets took a massive hit in valuation following the delayed/rejected action of the SEC, with all of late July and early August’s positive price gains being eroded in the span of a week. While the current trend in market pricing looks to be making a small recovery, with BTC clinging to $7000, altcoins continue to make a major hit—leading some to conclude that the hope of an ETF approval is still driving most of the price interest.

However, not everyone has been pleased with the overwhelming shift in focus of the industry and investment base towards greater regulation. Andreas Antonopoulos, a mainstay figure and one of the most genuine supporters of blockchain and cryptocurrency, claims that the Bitcoin ETF will do more harm than good. Myopic investors, particularly those looking to cryptocurrency as a pathway to fast profit, are hanging on SEC approval of an ETF as the leverage needed to spur ‘institutional investors’: the big Wall Street firms that are waiting for a less murky landscape before they start pouring money in. Cryptocurrency purists see increased regulation as a diversion from the real use of cryptocurrency and adoption for the technology.

Regardless, Barhydt is confident ETF approval will happen sometime in the near future,

“It’s going to happen in the next year, I would actually make a bet on it. There is too much demand for it.”

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Recent Market Drop Reveals Industry Is Entirely Speculative Driven

Cryptocurrency–Confusing is the best word to sum up how the crypto markets have performed over the preceding weeks. Despite the excitement of July and early August’s price rally, a welcome sign in an otherwise severely bearish year, the crypto markets have again failed to hold momentum and slipped backwards. While Bitcoin has managed to sustain above $6000 for the time being, many of the top ten altcoins and beyond have reached all time lows for the year–some of which are approaching their valuation prior to 2017’s end of year explosion.

The result is investors and cryptocurrency enthusiasts left scratching their head and wondering how an investment class that is already eclipsing 90 percent in losses from the beginning of the year can continue to fall.

Some place the blame on the recent emphasis over a Bitcoin Exchange Traded Fund. While ETFs were hardly mentioned during 2017’s bull run (most of the news on that front was consumed with CBOE’s launch of BTC futures) the recent narrative in crypto has approached near obsession over the U.S. Securities and Exchange Commission green-lighting a Bitcoin ETF. The largest proponents of a BTC ETF are the same that continually rally around the “institutional money is coming” slogan, a belief that once Wall Street and other big-capital investors turn their sights to cryptocurrency prices will resume smashing all-time highs. However, the net effect has been an investment base hinging upon news of ETF approval, as opposed to any discussion on the advancement and adoption of cryptocurrency.

While 2017 will be remembered as one of the most bullish crypto markets of all time, 2018 has been far more practical in the sense that crypto’s real world presence is growing. Stories of adoption that are commonplace today would have been celebrated endlessly just twelve months ago. It’s understandable considering the wild price ride to end 2017 brought in a host of new investors–many of which are sitting on >50 percent losses–that are looking to recoup on their investment or find some positive spin on the massive fallout in value. However, speculation alone will not continue to drive the industry. The dot.com bubble never came close to killing the internet, despite the massive amount of capital it flushed down the drain in addition to shuttered companies, because the internet proved itself to be a resilient and necessary technology. Most within the industry of cryptocurrency find similar value in Bitcoin and other projects, it’s just the focus which has shifted away to endless discussion of price.

The Union Bank of Switzerland (UBS) published a report last week concluding that 70 percent of price movements within the crypto markets could be classified as speculative “momentum driven” interest. Value investing has gone out the window as nearly every cryptocurrency community experiences the inverse reaction of positive news being met with declining price. Again, the blame can somewhat be tied to the overall market reliance upon the health of BTC: altcoins rarely hold a standalone impact, and are always at the mercy of the original cryptocurrency when the market turns downward.

But even research into the various technologies, development teams and stories have adoption can be met with a degree of price mockery. To give a recent example, TRON announced a partnership with the world’s leading and most recognizable torrenting service BitTorrent, only to see a decline in price that is 93 percent below January’s all time high. Every currency is suffering, and investors are left with no choice but to try and time the market and cut their losses. However, most of the speculation is being driven by a pan-belief in the declining market. Investors are selling because they believe others will sell and the price will go down, creating a self-fulfilling prophecy that is not indicative of the health of the industry.

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VanEck: Bitcoin ETF Answers $1 Billion Question

Bitcoin (BTC)–The entire landscape of cryptocurrency hangs on an upcoming decision by the United States Securities and Exchange Commission (SEC) in relation to approving Bitcoin Exchange Traded Funds (ETFs). While just a month ago the industry was optimistic about the creation of BTC ETFs, the last several weeks have brought about a change in narrative.

It started with the announcement of the Winklesvoss twins’ bid for creating a crypto ETF being denied by the commission, stating the possibility of manipulation as their primary concern. While the market was rallying to double digit gains for nearly the first time this year, the price subsequently took a hit to below $8,000 for BTC. However, the price drop was short lived, as the bulls once again pushed forward on the belief in coming government regulation and institutional money. Bitmex co-founder Arthur Hayes made the high-profile prediction in July that the price of BTC would have no problem reaching $50,000 by year’s end riding on the back of an approved ETF. Unfortunately, the bullish turn in the market did not last for more than a week, with prices falling to below $7,000 and negating the positive momentum created from the ETF hype.

VanEck, a New York-based investment management firm, recently spoke with CoinDesk in an interview about the possibility of crypto ETFs and the impact they will have upon the market and industry. Gabor Gurbacs, director of digital asset strategy, put it this way when posed with the question about whether a Bitcoin ETF will be approved in the upcoming decision,

“I wish I knew the answer to your $1 billion question. Seriously.”

VanEck has been in the headlines as one of a handful of investment firms vying for creation of the first BTC ETF, with the company currently being a favorite in the race for approval. CoinDesk probed further in the interview, asking Gurbacs point-blank how he felt about his company’s chance to be green-lighted for operating the fund,

“Unfortunately, I don’t know the answer. I do know that we have addressed market structure issues and this is a chance for regulators to bring bitcoin under existing frameworks and protect investors.”

CoinDesk goes on to outline the steps VanEck has taken in securing its proposal to the SEC, a move that started three years ago via a the financial company SolidX which first sought to bring an ETF to the market. Gurbacs also makes a strong case for his company’s position over the recently denied Winklevoss ETF, stating that his company is planning to deliver an insured product, with all of the Bitcoin in the fund covered in a situation of “theft and hacks and losses of all sort.”

Gurbacs words go a long way in describing why the market has become consumed with the prospect of a BTC exchange traded fund, namely the security and protection it offers to Wall Street and other institutional investors. In addition, a positive ruling by the SEC would come with government regulations–which may be lamented by the crypto industry’s decentralized ethos–but provide a clearer picture for big-money firms looking to operate in the space. The current state of cryptocurrency is one plagued with hacks and other forms of scandal, with the legality of it all murky by most institutional standards.

Indeed, Gurbacs reiterates the company’s stance towards creating a product that is focused on institutional investors,

“Today, the bitcoin markets are still 90-95 percent retail and institutions are looking for a way to get into these markets so the physical ETF we have tailored to institutions.”

While Wall Street will bring an influx of funds to the crypto markets, hopefully to elevate the price of Bitcoin, some industry figures have become frustrated with the emphasis on SEC approval that is overriding the focus on the underlying technology.

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Over 600 Public Comments Flood the SEC Website For The CBOE Bitcoin (BTC) ETF

Back in mid July, Ethereum World News had notified its readers on how they could leave comments on the SEC website with regards to the filing of a Bitcoin ETF by the CBOE (Chicago Board Options Exchange) exchange. The filing proposes a rule change to list and trade shares of SolidX Bitcoin Shares issed by the VanEck SolidX Bitcoin Trust. When the story was published, there were approximately 20 public comments with regards to the CBOE ETF and why the SEC should approve it.

Looking once again at the comment section on the SEC website for the CBOE filing, we find that the SEC has published exactly 683 public comments at the moment of writing this. This is a good response from the public in a period of only one and half months after they were notified of the possibility of commenting on the SEC website.

One such comment by Austin Lawrence on the 18th of July, states the following:

Please approve this resolution as I believe that Bitcoin, and blockchain technology, can be a safe and effective method of cryptographically storing and transferring wealth.

Another comment from Michael Lyle, Technical Director at VFX, states that:

Bitcoin since it’s inception has been smeared in the public domain with issues relating to its use for illegal purchases. However the truth, as I am sure the SEC is fully aware now, is that distributed ledger technology, by its very nature, allows the close monitoring of exchange of value and allows zero anonymity IF ALLOWED to be regulated properly. The approval of this filing would mark a healthy new chapter, encouraging a new, open and healthy regulated crypto currency market, and gearing it away from taking a clandestine underground path, or being adopted by other emerging economies, leaving the US behind in terms of innovation and growth.

So how do you comment on the SEC website regarding the Bitcoin ETF?

As stated in our first article, there are 3 methods of doing so. Please note that the file number for the BTC ETFs on the SEC website is SR-CboeBZX-2018-040.

  • Online form
  • Comments can be submitted via this link
  • Look for SR-CboeBZX-2018-040
  • There should be a Submit comments section
  • Email
  • Send comments to [email protected].
  • The subject line of your message must include the File Number for the rule. This is the number that begins “S7-” or “SR-”.
  • If you attach a document, indicate the format or software used (e.g., PDF, Word Perfect, MS Word, ASCII text, etc.) to create the attachment. Please note that the SEC now accepts comment letters in PDF format. DO NOT submit attachments as HTML, GIF, TIFF, PIF, ZIP, or EXE
  • Using the traditional ‘Snail Mail’

    Send 3 copies of your paper comment letter to:

    Brent Fields, Secretary
    Securities and Exchange Commission
    100 F Street, NE
    Washington, DC 20549-0609

    Each copy must list the “File Number” for the rule. This is the number that begins “S7-” or “SR-”.

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UPDATE: Bitcoin Bulls Push BTC Price Back Above $8200

Bitcoin (BTC)–Investors in cryptocurrency, particularly the original coin BTC, have had an interesting week. While the currency managed to grow nearly 35% over the past two weeks, signaling what appeared to be the end of 2018’s prolonged bear cycle, the run was put to an abrupt halt following news of the Winklevoss twins’ bid for a Bitcoin ETF being denied by the SEC.

Bitcoin prices had hovered around $8300 for most of the week, before taking a plunge back into the $7900 range on Thursday when news broke that the Securities and Exchange Commission (SEC) had denied high profile crypto figures Cameron and Tyler Winklevoss the creation of a Bitcoin Exchange Traded Fund. The Winklevoss twins, who also founded the cryptocurrency exchange Gemini, had made a second attempt with the SEC on approval of a BTC-based ETF, which would mark the first ever of its kind. While much of the market and industry news has been in a stir over the looming–as some would put it “almost guaranteed”–creation of Bitcoin ETFs, the news came as a harsh ruling by the SEC on the potential for other funds.

However, while Bitcoin prices seemed to be rebuffed by the sudden news out of the U.S. regulatory agency, bullish investors were able to renew the price run on Friday morning, bringing BTC back into the $8300 range.

The denial of the Winklevoss ETF does represent a momentary setback for cryptocurrency. However, the SEC had previously announced a move to delay the decision on five other Bitcoin ETFs until September, giving the appearance that the agency is still collecting information on Bitcoin and evolving its position towards cryptocurrency. Given the overwhelming number of institutional figures, hedge fund leaders and other financial entities clamoring over the need for a regulated Bitcoin ETF, it seems only a matter of time until the SEC allows one to go through. As Arthur Hayes, co-founder of cryptocurrency exchange BitMex, told CNBC in early July, the presence of regulated funds in addition to greater government oversight in the investment process could lead to a significant price run for BTC.

While every investor and crypto-enthusiast has been espousing “institutional money” that has yet to throw its weight behind cryptocurrency, Hayes points out that most big-money and Wall Street players are waiting for greater clarity from government authorities before taking the plunge. Given the erratic nature of most exchanges, from hacks to the mounting catalog of consumer complaints, it’s almost no surprise that an ETF would provide a more appealing route for investing in Bitcoin. The bullish return for investors this morning would indicate that sentiments are still strong on the possibility of a BTC ETF creation, despite the setback received by the Winklevoss twins, as opposed to yesterday’s headlines concerning the status of a new fund formation.

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