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Here Is Why The Bitcoin (BTC) ETF Delay By The SEC Was Expected and Is Actually A Good Thing

The crypto-verse is a buzz with news of the SEC deciding to postpone their decision on the pending rule change brought about by the Bitcoin (BTC) ETF filing by the three firms of CBOE, VanEck and SolidX. The unfortunate part, is that the crypto markets have since spiraled out of control with the total crypto market capitalization dropping from levels of $254 Billion to current levels of $232 Billion within a period of less than 24 hours.

The King of Crypto, also known as Bitcoin (BTC), has declined by 6.15% in the last 24 hours and is currently trading at $6,564. Ethereum (ETH) has declined by 8.2% in the same time period and trading at $374. XRP has been hit hard by the news and is down 13.77% and trading at $0.35.

But the knee jerk reaction in the crypto markets due to a postponement should not have happened for it had been foreshadowed by numerous crypto enthusiasts and financial experts beforehand.

Anthony Pampliano, partner and co-founder at Morgan Creek Digital Assets, had expressed his doubts back in July when he said:

There’s a lot of speculation on the new ETF decision, [but] I don’t think it’ll get approved in the next 30 days or so. There’s a lot of people excited about that.

Similarly, more crypto analysts had noted that the SEC had a right to extend on the initial 45 day period that they could make a ruling on the ETF. This can be seen in the tweet below by Ran NeuNer, who is CNBC ‘s Cryptotrader host:

In the public notice letting the public know of the delay, the SEC explained why they chose to delay the announcement till September 30th:

Section 19(b)(2) of the Act5 provides that within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding…

The Commission is extending this 45-day time period. The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change.

So why is the postponement a good thing?

Firstly, it means the SEC is finally listening to the public as to why the Bitcoin ETF should be approved. Ethereum World News had recently reported that the SEC had received 683 public comments on its website with regards to the CBOE sponsored ETF.

The SEC has since clarified that this number is over 1,300 when they stated the following:

The proposed rule change was published for comment in the Federal Register on July 2, 2018. As of August 6, 2018, the Commission has received more than 1,300 comments on the proposed rule change.

Secondly, with the delay, this means that the SEC is probably also considering the recent Bakkt news announcement by the Intercontinental Exchange that will provide a regulated exchange and a custody service from a reputable trading firm. This was the reason they reject the Bats ETF by the Winklevoss. There was no firm providing the two mentioned services.

Thirdly, the public dissent of Commissioner Hester Pierce has shed some much needed light that not all the commissioners are against cryptocurrencies. This will in turn mean that they have to consider her plight – as highlighted in her dissent – with the next Bitcoin ETF that they review.

Summing it all up, the crypto markets evidently over-reacted to the delay on the CBOE Bitcoin ETF that was more or less expected by the crypto-community. The delay can be considered a good thing for the SEC is now listening to public opinion as well as internal opinion from SEC officials who believe a Bitcoin ETF should be highly considered by the body. The chances of the Bitcoin ETF now being accepted in September, have increased tremendously. Also, if the SEC were to reject the ETF this month, they would do so without even notifying us of a delay. They would just do it! The delay proves they are seriously considering it.

Disclaimer: This article is not meant to give financial advice. Any opinion herein should be taken as is. Please carry out your own research before investing in any of the numerous cryptocurrencies available.

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Ethereum (ETH) Founder, Vitalik Buterin, Says ETF Issues Overhyped

Ethereum Founder, Vitalik Buterin has stated that there has been unnecessary emphasis on Bitcoin and Ethereum ETFs, saying although the ETFs may help pump price, campaign for mass adoption should be given much emphasis because it has long-lasting effect on cryptocurrency.

Vitalik who’s of the opinion that stores need to start accepting cryptocurrency sees hope in the perspective than in the ETFs which is causing unnecessary havoc in the cryptocurrency space.

“I think there’s too much emphasis on BTC/ETH/whatever ETFs, and not enough emphasis on making it easier for people to buy $5 to $100 in cryptocurrency via cards at corner stores. The former is better for pumping price, but the latter is much better for actual adoption.”

SEC Disapproval Of Winklevoss Brothers’ Application

On the 27th of July, cryptocurrency market witnessed a drastic downturn which must likely be a reaction to the United States Securities and Exchange Commission’ (SEC) decision to turn down Winklevoss brothers’ application for a Bitcoin exchange-traded fund (ETF).

Although, crypto market recovered, the news held the market for hours, making people think the end of crypto was signaled.

There is A big Difference

It is worthy to note that, according to Coindesk, the bitcoin ETF proposed by the Winklevoss brothers is not the same with the bitcoin ETF by investment firm VanEck and financial service company SolidX, which many people are discussing in the cryptocurrency space.

VanEck and SolidX made known that they applied to the SEC to get approval to kickstart what could be seen as the first bitcoin-based ETF. Responding to this application, SEC demanded comments on the request, interestingly, over 100 comments have been received, and SEC may respond to it any moment.

The Winklevoss bitcoin ETF was according to SEC rejected because the application is not “consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.”

Crypto Community Is Calm.

While SEC’s decision has caused uproar in the crypto community, some respected investors keep on calming those who may be scared, saying the decision by SEC is nothing but a fume that will soon go into obscurity.

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SEC Commissioner Officially Dissents From New Bitcoin ETF Decision, Becoming Popular on The Crypto Community

Following the SEC’s decision to reject the application for approval of the Winklevoss Bitcoin Trust for listing and trading shares on Bats BZX Exchange, Inc. (BZX), the SEC Commissioner Hester Peirce issued an official Dissent in which she states her opinion regarding what she considers an incorrect decision:

“I respectfully dissent from the Commission’s order disapproving a proposed rule change, as amended, to list and trade shares of the Winklevoss Bitcoin Trust on Bats BZX Exchange, Inc. (“BZX”).”

Ms. Peirce’s voice reflected the sentiment of several members within the crypto community who consider that government controls pose a barrier to the potential benefits that cryptos and blockchain technologies could bring to the world:

“I reject the role of gatekeeper of innovation—a role very different from (and, indeed, inconsistent with) our mission of protecting investors, fostering capital formation, and facilitating fair, orderly, and efficient markets. Accordingly, I dissent.”

This would be the second time the Winklevoss twins fail in their attempt to obtain approval from government agencies. The first time was in 2017.

If approved, it would be the first cryptocurrency ETF and would have allowed trading mutual funds and institutional investments with cryptocurrencies.

The SEC released a filing on its decision, stating that the arguments put forward by BZX to justify the safety of the funds are not sufficient to eliminate fears of price manipulation.

SEC Clarifies: They Are Not Against Cryptos

SEC was emphatic in mentioning that the decision focuses on the BZX argument and that they do not deny the value that Bitcoin or DLTs can have as innovations in the business world:

“Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because, as discussed in detail below, BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.”

The SEC mentioned that it is very possible that over time conditions will be created for crypto ETFs to meet the requirements of state agencies thus allowing for a healthy crypto-market to exist within U.S. territory:

“The Commission notes that regulated bitcoinrelated markets are in the early stages of their development. Over time, regulated bitcoin-related markets may continue to grow and develop. For example, existing or newly created bitcoin futures markets may achieve significant size, and an ETP listing exchange may be able to demonstrate in a proposed rule change that it will be able to address the risk of fraud and manipulation by sharing surveillance information with a regulated market of significant size related to bitcoin … Should these circumstances develop, or conditions otherwise change in a manner that affects the Exchange Act analysis, the Commission would then have the opportunity to consider whether a bitcoin ETP would be consistent with the requirements of the Exchange Act.”

For SEC Com. Hester Peirce Such Allegations Are Not Enough

Ms. Peirce deems this argument to be contradictory as decisions such as the one taken simply hamper the changes that SEC itself consider would be positive should they occur.

Ms. Peirce’s letter made her popular in the community. In several Reddit Forums as well as Ms. Peirce’s Twitter account there are statements of support for her position as the voice of the crypto community in the SEC.

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Here is Why The Rejected Winklevoss Bitcoin (BTC) ETF is Different from The One Filed By the CBOE

The news of the rejection of the the Winklevoss Bitcoin (BTC) ETF by the SEC shook the crypto-markets immediately. This was due to the fact that many traders were confused as to whether this was the highly anticipated ETF that would send the prices of Bitcoin to the roof. It has since emerged that the Winklevoss Bitcoin (BTC) ETF was not expected to pass and that the ETF that pundits were excited about, was proposed by VanEck and sponsored by CBOE.

In a commentary to Ethereum World News, Mati Greenspan, a Senior Market Analyst at eToro stated that:

There’s a lot of FUD and confusion out there in crypto markets right now so I’d like to clarify.

One of the many reasons that bitcoin is rising at the moment on anticipation of an ETF decision from the SEC. However, too many people have crossed their E’s with their T’s and F’ed the situation.

The Winklevoss ETF that was rejected (known as Bats) was never expected to pass. The ETF that pundits are excited about was proposed by VanEck and sponsored by the CBOE, which will likely not be decided on until March.

Mr. Greenspan would also comment on SEC Commissioner Hester Peirce, who publicly disagreed with the SEC decision to reject the Winklevoss ETF.

What is notable is the reaction from an SEC commissioner who strongly disagreed with the decision to reject Bats.

In her letter of dissent, Hester Peirce eloquently elaborates on how the decision to strike down Bats “undermines investor protection” and “Dampens innovation.”

The online community has now bestowed on her the nickname “CryptoMom” and her Twitter following is currently exploding.

Commentary on the Indian Law Commission recognizing cryptocurrency as an Electronic Payment 

Mati Greenspan was also optimistic that the Law Commission recognizing crypto as an Electronic Payment was a step in the right direction in India and with regards to the cryptocurrency and blockchain industry.

I’m not an expert in Indian law, I will refrain from commenting too directly…

What is clear to me, is that having a government wing like the Indian Law Commission recognizing cryptocurrencies in any capacity is a very positive step forward.

We’ll need to watch this space very closely over the next few months. Mass adoption of Bitcoin in India could very well be the tipping point that many crypto enthusiasts are waiting for.

In a nutshell, the ETF that was rejected by the SEC was not the one everyone was looking forward to in August. This was a different one although its rejection resulted in the crypto-community being acquainted with SEC Commissioner Hester Peirce who publicly outlined why she disagreed with the rest of the SEC on this decision. Also, there is a glimmer of hope in India with the Law Commission of the country recognizing crypto as an Electronic Payment.

Disclaimer: This article is not meant to give financial advice. It is an opinion piece. The opinion herein should be taken as is. Please carry out your own research before investing in any of the numerous cryptocurrencies available.

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