Posted on

‘Don’t Hold Your Breath,’ Waiting for Bitcoin ETF Says SEC ‘Crypto Mom’

U.S. SEC Commissioner Hester Peirce, dubbed “Crypto Mom” for her pro-crypto stance, said the future of a Bitcoin ETF is still uncertain.

A commissioner of the United States Securities and Exchange Commission (SEC) said ‘not to hold your breath’ waiting for a Bitcoin exchange-traded fund (ETF) at the Digital Asset Investment Forum held in Washington D.C. Dec. 5.

Hester Peirce, dubbed “Crypto Mom” by the community for her dissent with the SEC’s decision to reject a Bitcoin ETF proposed by Cameron and Tyler Winklevoss, said that a crypto or Bitcoin ETF is “definitely possible,” but it could be years away:

“Definitely possible could be 20 years from now or it could be tomorrow. Don’t hold your breath. The SEC took a long time to [establish] Finhub. It might take even longer to approve an exchange traded product.”

According to Pierce, she is also trying to convince her colleagues “to have a bit more of an open mind” when it comes to crypto adoption, but it might take a long time.

Regarding the possibility of Bitcoin institutionalization, Peirce said that the SEC sees a lot of institutional and retail interest and will interact with it in many ways. She further added:

“I think we need to encourage institutionalization in crypto space. That’s not what the people in the space want, but I think there are institutional folks who want to be in this space […] And the best way that we can offer retail investors to get into this space is through a place that’s more institutionalized.”

When asked about recent SEC enforcements, “Crypto Mom” said that people have to comply with the law, but the government is obliged to figure out whether the regulation is preventing people from realizing new or innovative ideas.

“I want to make sure that the doors to innovation are open wide enough, and they’re not too constrained by regulation,” she concluded.

In a recent interview SEC Chairman Jay Clayton refrained from providing any specific time frame for a Bitcoin ETF, but instead reiterated the SEC’s stance. “I’m not going to comment on timing or anything like that, but we’ve been clear on some of the issues that are of concern to us,” he told CNBC.

Posted on

SEC Delays Decision on Bitcoin ETF, Sets Deadline for Late February

The SEC has delayed its decision on rule change proposals to list a VanEck, SolidX Bitcoin ETF until Feb. 27, 2019.

The United States Securities and Exchange Commission (SEC) has again postponed its decision on the first ever Bitcoin (BTC) Exchange-Traded Fund (ETF), according to an official document published Thursday, Dec. 6.

The SEC set the new deadline for Feb. 27, 2019 in order to further review the rule change proposals to list a Bitcoin ETF by investment firm VanEck and blockchain company SolidX on the Chicago Board Options Exchange (CBOE):

“The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change.”

Under the Securities and Exchange Act, the commission must “issue an order approving or disapproving the proposed rule change not later than 180 days” after the date of publication of notice. If the commission deems it necessary, it may subsequently extent that period by 60 days.

As the proposed rule change was first published in the Federal Register on July 2, 2018, the maximum period of consideration falls 240 days later, on Feb. 27, 2019.

Both VanEck and SolidX firms filed with the SEC to list a Bitcoin-based ETF on June, 6. Subsequently in August, the commission delayed its decision on listing the ETF until Sept. 30.

The commission then requested further comments regarding the decision, claiming that the agency has not “reached any conclusions with respect to any of the issues” on the rule change.

In early October, the commission set a deadline for submitting comments about proposed rule changes related to a number of applications for Bitcoin ETFs.

Last week, the SEC published a memorandum on a meeting with representatives from VanEck, SolidX, and CBOE. The applicants claimed there was precedent for a Bitcoin ETF based on other commodities with ETFs like gold and crude oil.

Recently, SEC commissioner Hester Peirce, who is known for her pro-crypto stance, receiving the title of “crypto mom,” claimed that a Bitcoin ETF could come “tomorrow or in 20 years.” She said:

“Don’t hold your breath. Look, it took a long time for SEC even to establish Finhub.”

Posted on

Europe Leads the Way With Crypto Exchange-Traded Products

Crypto exchange traded products prove divisive, as the SEC mulls over its latest landmark decision.

On Nov. 16, Switzerland’s primary stock exchange, SIX Swiss Exchange, announced that it will list the world’s first multi-crypto-based exchange-traded product (ETP).

Exchange-traded products (ETP) are derivatively priced securities that are traded on a national securities exchange. Their pricing derives its value from other investment instruments, most commonly found in the form of commodities, stocks and indexes.

The first global multi-crypto ETP has the backing of Swiss startup Amun AG and will be listed under the ticker symbol HOLD. According to the announcement, the ETP will track five of the sector’s biggest cryptocurrencies: Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC).

The announcement also reveals that each of the five cryptocurrencies will obtain a degree of the market share within the ETP, although Bitcoin will reportedly make up roughly half of the ETP’s overall assets. XRP, the now second-biggest cryptocurrency, will make up 25.4 percent of the assets, followed by Ethereum with 16.7, Bitcoin Cash at 5.2 percent and Litecoin with 3 percent.

In spite of many hopeful product launches across the crypto sector attempting to hasten mainstream adoption, regulation issues remain a serious and consistent barrier to progress. Hany Rashwan, co-founder and chief executive of Amun AG, has not overlooked this potential sticking point and maintains that the product will comply with the existing strict policies that apply to all other ETPs.

Amun’s official website states that SIX Swiss Exchange is Europe’s fourth-largest exchange and has a market capitalization of $1.6 trillion.

The listing of the multi-crypto based exchange is not Europe’s first experiment with crypto ETPs. Swedish company XBT Provider has been running the lucrative CoinShares exchange-traded product since 2015. This listing is the latest crypto development in Sweden, a state well known for its open-minded approach to innovation in the fintech sector, as well as a country predicted to become the first “cashless economy.”

Coinshares has two Bitcoin trackers: XBT Bitcoin Tracker One (COINXBT) and XBT Bitcoin Tracker Euro (COINXBE). As previously reported by Cointelegraph, the two trackers trade in both euros and Swedish krona.The product ascribes 200 shares as equal to the price of one Bitcoin for trading in Swedish krona and 20 shares to one Bitcoin for the euro version. The product is accessible to investors from across Europe and has attracted over $1 billion since its 2015 listing on Nasdaq Stockholm, leading developers to launch additional versions in neighboring Denmark, Latvia, Finland and Estonia.

Coinshares caught the eye of billionaire crypto investor Mark Cuban early on. Speaking at the Vanity Fair New Establishment Summit in Los Angeles, Cuban commented on the investing experience and the ascription of asset value:

“It is interesting because there are a lot of assets which their value is just based on supply and demand. [With] most stocks, there is no intrinsic value, because you have no true ownership rights and no voting rights. You just have the ability to buy and sell those stocks. Bitcoin is the same thing. Its value is based on supply-demand. I have bought some through an ETN based on a Swedish exchange.”

According to Bloomberg, COINXBE has total assets of 96.5 million euros and COINXBT has total assets of 986.3 million Swedish krona.

The ETF battle continues in the United States

Perhaps the most established exchange-trading method in the crypto world is that of exchange-traded funds (ETF).

An ETF tracks a commodity, bonds, a stock index or one or several assets. Single-asset ETFs are now commonplace and can be used to trade a variety of assets, such as gold. As ETFs are already a major tool for passive investment in mainstream finance, many players in the crypto community hope that ETFs will pave the way toward widespread adoption.  

Part of the allure of ETFs that track a basket of assets is that, by their very nature, they are less prone to the risk of fluctuations that other investment instruments are vulnerable to. Because the value of the investment is spread across multiple assets, losses from underperforming assets are counterbalanced by those that more rapidly accrue value. As a result of this, ETFs enjoy popularity among low-risk investors.

A Bitcoin ETF tracks Bitcoin as the underlying asset. This results in the investor only holding the security of the Bitcoin without actually owning the coins themselves. So far, Bitcoin ETF applications to the U.S. Securities and Exchange Commission (SEC) have not been successful. Billionaire twins and major crypto players Tyler and Cameron Winklevoss have had two high-profile applications denied by the SEC so far, the most recent being rejected in July. The rejection was accompanied by a 92-page report on the application that disagreed with the the Winklevoss Bitcoin Trust’s claim that Bitcoin markets are “inherently resistant to manipulation.” In the report, the SEC honed in on this point in particular:

“The arguments submitted in support of this claim are incomplete and inconsistent, and are unsupported or contradicted by data.”

In spite of the repeated setbacks for the Winklevoss twins’ ill-fated applications, the seemingly hardline approach of the SEC has not prevented further applications from being made throughout the year.

SEC mulls over latest ETF application

Earlier this year, investment management firm VanEck and the blockchain technology company SolidX, applied for a physically-backed Bitcoin ETF to be listed on the Chicago Board Options Exchange’s BZX Equities Exchange. The proposal would see each share in the ETF valued at around $200,000, in an attempt to lure in institutional investors.

This tactic could prove to pay off for the two companies, considering Morgan Stanley’s October report that documented Bitcoin’s new potential for mainstream institutional investment. Furthermore, the fact that the ETF is backed by derivatives means that the firms in question will actually hold BTC as opposed to their corresponding value, a factor which may well be important in influencing the way the regulatory decision will fall for the application.

As the SEC decided to postpone their decision in August, the two companies have yet to receive an official reply. Given that, as of Aug. 22, a total of nine Bitcoin ETF applications from three separate applicants have been rejected outright, the drawn out nature of the SEC’s decision making, along with the huge potential for crossing over into the financial mainstream that it brings, the outcome is eagerly awaited by the crypto community. The SEC did, however, publish a memorandum from a meeting about the proposal in October.

The memorandum outlines the past relationship between the two companies and the regulator, taking into account their most recent, ongoing project and the failed SolidX bid for an ETF to be listed on the New York Stock Exchange (NYSE) in March 2017. Also mentioned in the memorandum is the SEC’s reasoning behind the nine previously rejected applications. Two of the applications were made by ProShares, a further five were submitted by Direxion and two by GraniteShares. The SEC took umbrage at the notion that the Bitcoin futures market had “significant” demand and voiced concern at the possibility of “fraudulent and manipulative acts and practices”:

“[…] the Exchange has offered no record evidence to demonstrate that Bitcoin futures markets are ‘markets of significant size.’ That failure is critical because […] the Exchange has failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to Bitcoin is necessary.”

The memorandum also documents how VanEck, SolidX and the representatives of the Chicago Board Options Exchange (CBOE), vehemently disagreed with the regulators on this issue, adding that their choice of the word “significant” was deliberately imprecise and enabled them to manipulate agreements between the involved parties:

“As issuers, we are concerned the SEC staff have created a moving target in their use of the word ‘significant.’ The Staff have never provided guidance as to what ‘significant’ means, enabling them to move the goal post indefinitely.”

In spite of the tough stance the SEC has taken against the previous applications, Commissioner Hester M. Peirce announced that the regulator would once again review them in the future. In a publication that broke from the official standing of the SEC regarding Bitcoin and cryptocurrency in general, Commissioner Peirce claimed that the regulator had overstepped its “limited role” in focusing on the market itself as opposed to the derivative in question:

“The Commission erroneously reads […] the [Securities Exchange] Act, which requires […] that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices…’ [It] focuses its decision not on the ETP shares to be listed […] but on the underlying Bitcoin spot market […] [instead of] the ability of BZX […] to surveil trading of and to deter manipulation in the ETP shares listed and traded on BZX.”

On Oct. 4, the SEC announced that, “by Nov. 5, 2018, any party or other person may file a statement in support of, or in opposition to, the action made pursuant to the delegated authority.”

The latest proposal from SolidX, VanEck and the CBOE is reported to remain under review by the regulator until February 2019.

SolidX, VanEck and the CBOE are not the only ones who predict a more open-minded approach to Bitcoin ETFs. CNBC crypto analyst Brian Kelly believes that Chicago Mercantile Exchange statistics indicate a growing trend toward the derivatives marketplace and a rapidly evolving futures market. Kelly said that this is likely to improve the environment for SEC Bitcoin ETF approvals as early as next year:

“Here’s CME Futures open interest of large holders. [As of] April, you’re starting to see a big increase […] about an 85 percent growth rate. If you extrapolate that out, by February 2019, you’re going to have a very robust market here.”

Not all crypto players, however, share the same bullish approach. Tech entrepreneur, Andreas Antonopoulous, said that, although he expects the SEC to approve Bitcoin ETFs, he does not expect them to benefit the crypto industry in the long term:

“I’m going to burst your bubble. I know a lot of people really want to see an ETF happen because ‘to the moon, and lambos,’ but I think it is a terrible idea. I still think it is going to happen, I just think it is a terrible idea. I’m actually against ETFs. I think a Bitcoin ETF is going to be damaging to the ecosystem.”

Skepticism spreads outside the U.S.

On Nov. 20, the U.K.’s financial regulator, the Financial Conduct Authority (FCA) announced in a speech that it is considering a ban on cryptocurrency derivatives. The regulator stated that this latest announcement was part of its intention to create its “most comprehensive” response to the industry.

Speaking at the “Regulation of Cryptocurrencies” event in London, the FCA executive director of strategy and competition, Christopher Woolard, emphasized that the organization was looking into outlawing derivatives. The ban would also likely include options, futures and transferable securities. Woolard elaborated on how the FCA is concerned about consumer welfare, as well as other issues across the market:

“We’re concerned that retail consumers are being sold complex, volatile and often leveraged derivatives products based on exchange tokens with underlying market integrity issues.”

Light at the end of the tunnel for ETPs

From the mixed bag of comments from crypto players, what appears to be gaining traction is the notion that crypto exchange-traded products are likely to make their entrance into the sector regardless of whether they will actually enrich the cryptocurrency sphere or not. In spite of the progress being made to implement these investment instruments in both Sweden and Switzerland, the real litmus test will be the regulatory decision from the SEC.

Commissioner Peirce’s harsh insider critique of the regulatory body’s past behavior — along with the announcement that the past nine rejections will be re-examined — could signal that fortunes are finally set to change for crypto exchange-traded products in the United States.

As the U.K. works through its latest regulatory quandary, other players maintain that there is a market appetite for Bitcoin ETFs and it is only a matter of time before they are made available.

Posted on

Why Bitcoin Dropped by Over 10 Percent, Deleting $40 Billion From Crypto Market, Experts Explain

Four experts speak to Cointelegraph about the 13 percent drop of Bitcoin, evaluating market slump.

Over the past two days, the valuation of the cryptocurrency market has plunged to $201 billion as Bitcoin lost 13 percent, moving closer to its yearly low at $192 billion.

Since Sept. 6 when the price of Bitcoin dropped by more than 10 percent within a one-hour period, the cryptocurrency market has been on a continuous decline. Tokens bled out more intensely than they previously did in April and June, losing out 10 to 30 percent against Bitcoin.

Source: coin360.io

Cointelegraph interviewed ThinkMarkets chief market analyst and former Bank of America trader Naeem Aslam, eToro senior market analyst Mati Greenspan, and well recognized cryptocurrency technical analyst Uzi, delving into the recent drop of Bitcoin and the rest of the cryptocurrency market.

$40 billion drop: One of the biggest daily decline in recent years

On Sept. 6, the cryptocurrency market lost nearly $40 billion from its valuation in less than 24 hours, demonstrating one of the steepest declines in the past three years.

Source: CoinMarketCap.com

In mid August, the cryptocurrency market dropped to its yearly low at $192 billion, but it took seven days from Aug. 7 to Aug. 14 to record such a large drop in valuation.

Prior to Wednesday, throughout the month of August, Bitcoin showed its highest level of stability since June of 2017, as researchers at Diar noted. From Aug. 8 to Aug. 26, the price of Bitcoin remained relatively stable in the $6,000 region, before initiating an overdue corrective rally above the $7,000 resistance level.

Source: CoinMarketCap.com

But, a rushed rally from the $7,000 mark to $7,400 within a four day period led sell pressure to build up, allowing bears in the cryptocurrency exchange market to take over, leading Bitcoin to fall by a large margin.

In late August, ShapeShift CEO Erik Voorhees said that the bear market is not over yet, but the low price range of major cryptocurrencies present a viable opportunity for new investors to come into the market.

The daily chart of Bitcoin demonstrates four similar movements since February. In the past six months, Bitcoin has risen to $10,000, fell to $6,000, recovered to $10,000, and tested the $6,000 resistance level on four occasions.

In February, Bitcoin surged to $11,000 but fell back down to $6,000. In April, Bitcoin rose to $10,000 and dropped to $6,000. In July, Bitcoin rallied to $8,500, only to test the $6,000 resistance level a month later. In September, the same pattern occurs, with each peak on the upside eventually declining $6,000.

Caption: One-day Bitcoin price chart from Cryptowat.ch

If Bitcoin recovers from the $6,000 support level, the next short-term rally could send Bitcoin to $7,000, which may fall back to the $6,000 region. But, if the dominant cryptocurrency can successfully bottom out in the $6,000 region, a possibility for a proper mid-term rally with newly found momentum could emerge.

Factors behind the drop

Speaking to Cointelegraph, ThinkMarkets chief market analyst Naeem Aslam said that speculators have unnecessarily intensified the downtrend of Bitcoin by overselling Bitcoin in the global exchange market.

Aslam emphasized that the downward trend of Bitcoin has not changed since December of 2017, when the cryptocurrency market achieved a $900 billion valuation and initiated a rapid decline:

“Speculators have gone crazy and they are trying to squeeze as much blood out of this trade as they can. Bitcoin hasn’t changed what it was since last December, so what is the panic?”

Aslam added that it is difficult to pinpoint specific factors that have led the price of Bitcoin to drop substantially in recent months.

Analysts and investors in the cryptocurrency market and the broader financial market often attempt to find correlation in cryptocurrency price movements to developments in the cryptocurrency and blockchain sector.

However, correlation is not equivalent to causation, and because an event occurs at a certain time in which cryptocurrency prices fall or surge by a large margin, it does not necessarily mean that the event triggered a big movement in the cryptocurrency market.

TABB Group, an international research company, reported in July that the over-the-counter (OTC) Bitcoin is at least two to three times larger than the cryptocurrency exchange market.

Under the assumption that the OTC market is in fact two to three times bigger than the exchange market of crypto, developments in the cryptocurrency sector should have minimal impact on the price movements of cryptocurrencies — at least in the short-term — as the exchange market depends on the larger OTC market.

Reports have suggested that the correction of Bitcoin initiated on Wednesday was mainly caused by the delay in the decision of Goldman Sachs to launch a Bitcoin trading desk.

It is far-fetching to claim that the decision of a major investment bank to pivot from offering Bitcoin trading services — which may not appeal to its consumer base of institutions and large-scale corporations — to cryptocurrency custodian services led the price of Bitcoin to plunge within an hour.

Rather, it is more likely that the continuous build up of sell pressure on Bitcoin and other major cryptocurrencies since December of 2017 created instability and volatility in the market, causing the valuation of the market to drop.

Because the volume of Bitcoin remains relatively low in comparison to traditional assets and stores of value like gold, it is easier to trigger a domino effect across leading cryptocurrency exchanges.

Goldman Sachs delaying Bitcoin trading desk not relevant

On Sept. 6, Cointelegraph reported that Goldman Sachs has delayed the formal launch of its Bitcoin trading desk that is structured to facilitate rising demand from retail traders and individual investors.

Goldman Sachs spokesperson Michael DuVally told Reuters that the bank has not been able to reach consensus on the roadmap of its digital asset venture, citing various regulatory issues that currently exist in United States markets.

Hours after the statement of DuVally was released, Martin Chavez, the chief financial officer at Goldman Sachs, personally refuted reports that the institution is pivoting away from forming a Bitcoin trading desk operation, characterizing reports around it as “fake news.”

Aslam stated that it is premature to attribute the market’s struggle throughout this week to the delay in the launch of the Bitcoin trading desk operation by Goldman Sachs, as the bank has not closed its operation but merely delayed it to focus on a more urgent initiative that is cryptocurrency custodianship:

“Goldman has only delayed the process, they still have invested a lot of money and talent in this area. Investors must know it is very normal for banks to delay the IPO process if the market conditions are not favorable and over here we are talking about starting something completely new. Goldman has its fingers in many of the areas when it comes to Bitcoin, so stop thinking about it and focus on the price.”

Currently, the cryptocurrency market has a wide range of regulated exchanges in the likes of Coinbase, Gemini, and UPbit that can be used by retail traders to invest in the cryptocurrency market. However, it lacks trusted custodianship and solutions that can break the barrier between cryptocurrencies and institutions.

It can be argued that Goldman Sachs is working on a more urgent issue that needs to be addressed in order to convince the broader financial market and governments to acknowledge cryptocurrencies as an emerging asset class.

As such, while the Goldman Sachs announcement contributed to the fall of the market, as cryptocurrency technical analyst Uzi told Cointelegraph, it is difficult to acknowledge Goldman Sachs as the sole cause for the correction. Bitcoin was already facing resistance around $7,400, the peak it achieved last week before sliding downwards:

“I feel the Goldman Sachs news about them rolling back plans on their crypto trading desk definitely helped trigger the Bitcoin drop, we were facing some tough resistance around $7,400 as well, but it’s not the biggest secret in the world that a massive amount of BTC shorts was added on Bitfinex days before this drop. 10K BTC in shorts, I believe — follow the money, as they say.”

Same bear trend since February

Mati Greenspan, a senior analyst at eToro, one of the largest multi-asset trading platforms in the global finance sector, with eight million active users, echoed the sentiment of Aslam by stating that the cryptocurrency market has been in a similar trend over the last few months, unable to break out of the $8,000 resistance level with solid volume and momentum:

“Volatility in the crypto markets has picked up over the last few days but is still pretty normal for this market. As far as Bitcoin’s price is concerned, the price has been in a rather stable range between $5,000 and $8,000 for the last few months and this hasn’t changed.”

Greenspan added that the volatility in the market can be attributed to the lack of demand from traders in the cryptocurrency sector, rather than specific events which analysts have pinpointed as the primary cause of the recent correction.

“Several possible reasons for the drop could be a few bad rumors that are circulating in the press, along with a stronger dollar and weakness in tech stocks. Ultimately though, it’s simply a matter of more supply and less demand in short-term trading.”

Technical analyst says Bitcoin market is illiquid, fake volumes

Bitcoin is not considered a sufficiently liquid market, especially considering the fact that its exchange market is open to any individual investor and retail trader in the global market. While cryptocurrency market data providers estimate the daily volume of Bitcoin to be around $5 billion, studies have shown that most major cryptocurrency exchanges inflate their volumes through wash trading.

Alex Kruger, an economist and a cryptocurrency trader, stated earlier this week that Bithumb, South Korea’s second largest cryptocurrency exchange behind Kakao-run UPbit, said that more than $250 million worth of fake volume was created since Aug. 25.

He explained that one group of traders has been taking advantage of Bithumb’s 120 percent trading fee payback, which can generate about $90,000 in net income, with a $250 million daily trading volume.

“There currently are $250 million [in] fake volume traded at [the] Korean crypto exchange Bithumb, every day at 11 a.m. Korean Time, since Aug. 25. Bithumb offers 120 percent payback of trading fees as an airdrop. Trading fees are 0.15 percent taker. To collect the full KRW 1 billion rebate, a wash trader must thus trade KRW 278 billion. That is $250 million in daily fake volume. Notice how 31K Bitcoin are traded at exactly 11 a.m.”

Directly or indirectly, the method utilized by Bithumb has incentivized wash trading that bumps up the daily trading volume of the cryptocurrency exchange. The end outcome is a daily net income of $90,000 for a group of traders and a significant increase in the daily trading volume of Bithumb.

However, while the method leads to a win-win situation for both parties, it affects the global cryptocurrency exchange market in a negative way — as it reduces the authenticity of the international trading volume of cryptocurrencies.

Uzi stated that liquidity and fake volumes are two problems that cryptocurrency exchanges will have to address urgently, to ensure that investors in the market are protected and governments can recognize the sector as a legitimate industry:

“Solving the liquidity issue is one that needs to be tackled, and the issue of fake volume is something that needs to be addressed on a larger scale, because there are definitely questionable volumes on major exchanges.”

Uzi also noted that the Bitcoin market is still generally illiquid, given the lack of activity from institutions and large-scale hedge funds in the sector. He stated that the market is still not ready to support big demand from institutional investors, and most short or long contracts around Bitcoin filed through the U.S. futures market or cryptocurrency exchanges are done by individual investors.

“I have always felt the market for Bitcoin is still illiquid, and especially if you look at the altcoins market. I don’t feel any professional institution would take up a short position at that time on Bitcoin just out of the sheer volatility and the momentum it had testing a decent resistance, as well as the massive short being opened that was noticeable to most, it would be terrible risk management.”

Where the market goes next with Coinbase ETF variable

As Cointelegraph reported on Sept. 7, the world’s largest asset manager BlackRock, which oversees $6.317 trillion in assets, and Coinbase, the cryptocurrency sector’s biggest exchange and brokerage, are in talks to develop a cryptocurrency-based exchange-traded fund (ETF) to bolster market activity and facilitate growing demand from institutions for cryptocurrencies.

The entrance of VanEck and the Chicago Board Options Exchange (CBOE) has already increased the probability of the approval of the first Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC). The involvement of BlackRock will create more competition in the Bitcoin ETF space among U.S.-based regulated financial institutions, which may lead to more contenders filing with the SEC to improve the liquidity of the dominant cryptocurrency.

Variables like Bakkt, the Coinbase-BlackRock ETF and positive regulation-related developments in Japan and South Korea could contribute to the recovery of the cryptocurrency in the short-term, which previous corrections in 2012, 2014, and 2016 did not have.

Experts generally agree that the correction of the cryptocurrency market on Sept. 6 was caused by increasing sell pressure and a culmination of various developments, rather than a single event like the Goldman Sachs Bitcoin trading desk announcement having an immense impact on a global market.

Posted on

Coinbase Explores Bitcoin-Backed ETF With Wall Street Giant

Coinbase Hints At Plans For ETF 

Bitcoin-backed ETFs have been the topic of discussion throughout the cryptosphere over the past few months, as investors and traders claimed that a single publicly-traded ETF would revive the otherwise slumping market. And it seems that this discussion may continue, with those familiar with the matter recently revealing that Coinbase has its eyes on establishing a crypto-focused exchange-traded fund (ETF) in a bid to attract retail investors.

It is important to note that the planned ETF will likely track a variety of cryptocurrencies, not just Bitcoin, possibly indicating that the firm is continuing to look at more crypto assets to add to its already expansive ecosystem.

Although this news was somewhat to be expected, as Coinbase has become well-known for being the primary home of innovation in the cryptosphere, insiders revealed that the firm has sought help from Wall Street giant BlackRock to aid in the establishment of this vehicle, reports Business Insider.

For those who are unaware, BlackRock is a New York-based, yet multinational investment management corporation with over $6.3 trillion worth of assets under management. As reported by Ethereum World News previously, BlackRock has hinted at making a meaningful foray into the cryptocurrency & blockchain industry, so it would make sense for Coinbase to team up with such a firm.

Those familiar with the cryptocurrency company went on state that in recent weeks, Coinbase has been incoinbase adds 100k users contact with individuals from BlackRock’s blockchain-focused division to “tap into the firm’s expertise” of launching exchange-traded investment products. According to the aforementioned insiders, representatives from the Wall Street firm’s blockchain branch were unable (or did not want to) give any direct advice to the San Francisco-based crypto startup at this time.

As Business Insider went on to report, it remains to be seen whether Coinbase’s involvement and discussion with BlackRock are ongoing or just a one-off event, but many optimists hope that it is the former, as a long-term relationship between the two may lead to interesting crypto-focused products, services, and investment opportunities.

The current climate around Bitcoin ETFs is rather contested, with the SEC recently making a series of moves to deny and delay a multitude of ETF proposals from an array of firms, whether said firms hail from crypto-focused or legacy market-centric backgrounds.

But as covered by Ethereum World News, the CEO of crypto startup Abra recently stated that the SEC’s denial verdict is somewhat valid, as the firms backing the ETF applications don’t “feel, smell or look” the part of a traditional financial institution. So the fact that Coinbase could be potentially working with BlackRock, an evidently well-established financial institution, may signal that an ETF application spawned from a collaborative effort between the two firms could see regulatory approval in the near future.

Photo by Luca Bravo on Unsplash

The post Coinbase Explores Bitcoin-Backed ETF With Wall Street Giant appeared first on Ethereum World News.

Posted on

Dogecoin (DOGE) Game-Changing Stellar Performance: Ethereum’s ETH Impact on the Coin

It seems as all happened in a matter of seconds. Since Wednesday morning, traders have witnessed a major price plunge as BTC deep-dived to the lows of $6,450 from $7,377 in a day.

As explained in an EthereumWorldNews post, the last day and its speedy decline could make even us crypto-enthusiasts conclude that the market is too volatile to get a thumbs up by SEC. Believing that the crypto recovery will be supported by ETF acceptance from the commission could turn to a long waiting game.

However, impacting your opinion with the original idea on how Bitcoin and the whole blockchain concept initiated, we do not need ETF for the crypto-verse to be significant. When adoption hits the level of making tokens immune to bearish news that the ecosystem could be settled.

With that said and in the midst of this violent sell-off taking place, there is one beloved meme-d coin the community loves – Dogecoin.

Dogecoin DOGE

Surely it is known how altcoins follow the performance majorly of the one in lead Bitcoin BTC against the USD, however in the past week the pair DOGE/USD kept its head above waters with a unique movement pattern. The latest announcement of a Ethereum-Dogecoin network bridge for efficient transfer between the two might have caused the bullish sentiment over the coin. The elaborated coin here is in more benefit as its range of operations increases accordingly with the second in lead Ethereum’s flexibility with smart contracts.

Getting back to the market now, out of all the top-50 leading coins DOGE is the only that is not in the decline with a double digit percentage. Being in the red with only 4.00% for the last 24-hours, it is balancing bulls and bears at $0.0049 attempting to make it above $0.0050.

This independence from the market action showcased by Dogecoin could bring more investment to flow-in while accordingly hoisting the value even more. Additionally it requires a low level of money to put a good amount of the token in your digital wallet.

loading…

Posted on

Abra CEO: SEC Denies Bitcoin ETFs Because Applicants Do Not Fit Industry Archetype

The reason the U.S. Security and Exchange Commission (SEC) has insofar denied crypto exchange traded funds (ETFs) is because the crypto industry does not fit the applicant archetype, according to the CEO of crypto payment startup Abra, CNBC reported September 4.

Speaking in an interview with CNBC’s “The Coin Rush,” Bill Barhydt suggested that the SEC has rejected crypto ETF applications because “people who are doing the applications don’t fit mold of who the SEC is used to approving.”

Barhydt said that in order to receive approval for an ETF, there should be an applicant who “looks, feels and smells” the way the SEC expects them to. He further noted that a trusted financial organization has better chances to get approval than a startup or a relatively unknown company. Barhydt predicted that the SEC will finally approve a Bitcoin (BTC) ETF next year:

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

Barhydt’s statements follow some widely publicized rejections of Bitcoin ETF applications. In July, the SEC denied an appeal for the application of a Bitcoin exchange-traded fund by brothers Tyler and Cameron Winklevoss. On August 7, the regulator postponed its decision on the listing and trading of a BTC ETF from investment firm VanEck and financial services company SolidX until September 30.

Last month, Pantera Capital CEO Dan Morehead suggested that a BTC ETF would take “quite a long time,” saying that crypto adoption was still in its early stages. Morehead noted that the most recent asset that gained approval from the SEC for ETF certification was copper, a metal that “has been on earth for 10,000 years.”

Bitcoin is trading at $7,377 at press time, up more than 1 percent on the day, according to Cointelegraph’s Bitcoin Price Index.

Posted on

WSJ Crypto Reporter: The SEC’s Bitcoin ETF Concerns Are Valid

Last week, a metaphorical sword was stabbed through the hearts of crypto investors, as the SEC announced that it would be denying nine Bitcoin-backed ETF proposals from ProShares, Direxion, and GraniteShares. In three individual documents elaborating on the verdict, SEC commissioners outlined the fact that Bitcoin markets lack “significant size” and are still subject to widespread fraud and manipulation.  While the U.S. regulatory body has since sought to stay and “review” the denial verdict, the SEC’s concerns regarding such a vehicle still rang true in the ears of some, including the Wall Street Journal’s Paul Vigna.

As such, Vigna, who has become the WSJ’s foremost crypto reporter, recently appeared on CNBC to discuss his opinion regarding the regulatory state of Bitcoin/Crypto-backed ETFs.

Commencing his segment regarding the subject, the reporter stated:

The SEC’s concerns are very valid… for a currency that makes a big deal out of having a public transaction ledger, there is not a lot of transparency with exchanges — what’s going on behind the scenes. You can see the price, the transaction but you don’t really know who is doing the exchanges.

He went on to compare cryptocurrency markets to traditional capital markets, like a commodity or stock exchange, noting that such legacy exchanges actively provide “a lot of” oversight for these markets, and have a good grasp on the identity and background of its customers. Moreover, Vigna added that these systems allow a firm such as the Intercontinental Exchange (ICE) to pinpoint “anomalies and any kinds of manipulation” to prevent economic, political or legal damage. Even with these measures in place, malicious individuals and entities still do their utmost best to “game these markets,” leaving the cryptocurrency in an even worse regulatory state.

Vigna revealed that unless the SEC can determine how much manipulation is going on and from where it will be neigh-impossible for an ETF to hit retail markets.

An ETF Wasn’t Bitcoin’s Destiny

CNBC host Mellisa Lee then acutely brought up the idea of a Bitcoin ETF being a catalyst for markets, but noted that such a product goes against the very ethos of decentralization and self-custody. Alluding to the fact that custody isn’t proper ownership of the private keys, Lee added:

The passage or the approval of an ETF has been looked at by many in the crypto world as the next big catalyst… But there are some in the cryptocurrency industry who look at this and think that this isn’t right, so unless you own the Bitcoin, you don’t own the Bitcoin.

Vigna backed up this statement, pointing out that the “rift” between diehard decentralists and Bitcoin custody ETF vehicles will “not go away no matter what avenue or products are developed to get into Bitcoin.” But as many like to bring up, it is unimaginable to see the SEC approving an ETF or similar medium of investment without an established, experienced and secure custody solution.

Drawing his segment to a close, WSJ reporter Paul Vigna provided some insight on the SEC’s role in the cryptocurrency industry, adding that the regulatory body is doing its best to bring cryptocurrencies to the mainstream. He stated:

I think we’re at the point that good governments aren’t looking at this (crypto) as something they need to clamp down on, outlaw it, or drive it out of existence. They see that there is potential here and we have something that might be able to benefit people… They are trying to figure out ways where they can regulate it, make it mainstream enough so that we can use in our daily lives.

Photo by Joakim Honkasalo on Unsplash
Girl in a jacket

loading…

Posted on

SEC U-Turn on ETF Rejection — A Balancing Act for Adoption?

It’s been an interesting couple of days for a number of exchanges which were hoping to get the green light to launch various Bitcoin exchange-traded funds (ETFs).

On Aug. 22, the U.S. Securities and Exchange Commission (SEC) released its verdict on nine separate ETFs submitted by three applicants, ProShares, Direxion and GraniteShares.

The move denied the trio permission to move ahead with plans to launch their respective products. ProShares was looking to launch a pair of Bitcoin ETFs, Direxion had sought approval for five products while GraniteShares hoped to launch two offerings of their own.

However, the SEC made a U-turn on that original finding on August 23, putting out a statement that it would review its decision of all nine ETFs.

The regulator has not released a deadline for its review, but it means that these applicants may still be able to forge ahead with their ETFs.

Fears of fraudulent behavior, price manipulation

The SEC provided the same grounds for rejection for each of the various ETFs. The main concern seems to be that the companies are not meeting the requirements to “prevent fraudulent and manipulative acts and practices.”

Furthermore, the regulatory body raised concerns about the size of the Bitcoin ETF market. Considering that it is a very small domain, there is unease that the exchanges won’t be able to ensure that there is no market manipulation.

“Among other things, the Exchange has offered no record evidence to demonstrate that Bitcoin futures markets are ‘markets of significant size.’ That failure is critical because <…> the Exchange has failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to Bitcoin is necessary.”

It’s also important to note that the SEC made it clear that its original decision was in no way influenced by — or a reflection on — the value and use cases of Bitcoin and blockchain technology.

“[The agency] 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.”

Not all doom and gloom

Cointelegraph reached out to Anthony Pompliano, founder and partner at Morgan Creek Digital Assets, who addressed the topic in his Off The Chain newsletter this week.

Pompliano highlighted the main takeaways from the SEC’s judgement, which seems to have been fair, while also maintaining their focus on ensuring the safety of investors.

The ETFs in question differ somewhat from other offerings that have also been denied by the SEC. These nine ETFs are ‘derivative-backed,’ meaning the exchanges own futures contracts and not actual Bitcoin.

While the SEC will now review its latest rejection, Pompliano believes that the crypto industry will only see the launch of Bitcoin ETFs in 2019:

“The crypto industry will eventually get retail products approved by the SEC. The proper infrastructure and controls need to be in place first. This work will include implementing qualified custodianship, while preventing market manipulation. It is unlikely that regulators will be satisfied with any anti-market manipulation measures created during the remainder of this year. This would push the first ETF approval until 2019.”

As Pompliano suggests, there seems to be an infatuation with Bitcoin ETFs and the possibility of their issuance bringing better market sentiment for the cryptocurrency. However, these financial instruments could also have a negative effect on the stability of Bitcoin’s value, as Pompliano noted:

“In fact, an argument could be made that an ETF would simply give more people the opportunity to short Bitcoin, which would drive the price lower. Although this would be highly unlikely, we did see a significant increase in downward price pressures in the market with the introduction of Bitcoin futures roughly nine months ago. We’re living in an unpredictable market, so anything is possible.”

Cointelegraph also reached out to Cornell University associate professor Emin Gün Sirer, who had positive remarks in the wake of the SEC’s decision:

“The reasoning by the SEC is absolutely fair. The good news is that they are not saying anything negative about crypto as an asset class. In fact, they seem predisposed to accept it in the same category as every other asset, and they are applying the exact same standards as everything else. The problems they cite are not with the asset, but with the ecosystem that has been built around it.”

Gün Sirer believes that the main stumbling block lies at cryptocurrency exchanges, which are still plagued by problems like fraud and a lack of regulatory frameworks:

“The crypto community keeps hoping for a miracle, where the SEC suddenly has a lapse in judgment and reverses decades of its own practice, and keeps getting disappointed as a result. The SEC is patiently citing a small number of issues, all related to malfeasance or misbehavior at the exchanges. The crypto community has to learn to demand better, and evolve the ecosystem toward a higher standard.”

Until that happens, the Cornell University professor believes the SEC will continue to deny the approval of other ETFs.

Crypto analyst Brian Kelly reacted to the news positively in a segment on the CNBC Fast Money show, suggesting that the latest move points to an eventual approval of Bitcoin ETFs in February 2019. The barriers to entry, in his view, is the SEC’s ability to keep a close eye on trading and to identify fraud and manipulation.

Furthermore, Kelly says that the SEC believes that the Bitcoin futures markets are not yet mature — having only been around since December 2017:

“I think we’re incrementally closer to getting an ETF and a very positive thing was that Bitcoin didn’t sell-off. When a market, whether its Bitcoin or oil, doesn’t sell-off on the news that it should, that means there’s a sentiment change.”

Waves of change

While it’s unclear when the SEC will release a finding on the review of its decision on the latest ETFs, there is a lot to look forward to in September.

The SEC will deliver a ruling on Direxion’s proposed ETF on Sept. 21, while the deadline for another Bitcoin ETF proposed by financial services company SolidX and investment firm VanEck has been pushed back to Sept. 30.

It seems that the SEC is trying to give itself more time to make well-educated decisions when it comes to new exchange-traded products. This follows their announcement in July which denied the Winklevoss twins’ second application to launch a Bitcoin ETF.

The ruling had a big effect on the cryptocurrency markets, as values dropped across the board following the decision.

SEC commissioner Hester Peirce has been a staunch proponent of the approval of Bitcoin-backed ETFs. When the regulatory body denied the Winklevoss twins’ Bitcoin ETF for a second time, she publically dissented from the ruling.

In her statement, Peirce said the very creation of Bitcoin-related, exchange-traded products (ETP) would allow mainstream and institutional investors to gain exposure to the cryptocurrency in a regulated and more sheltered environment:

“An ETP based on Bitcoin would offer investors indirect exposure to Bitcoin through a product that trades on a regulated securities market and in a manner that eliminates some of the frictions and worries of buying and holding Bitcoin directly. If we were to approve the ETP at issue here, investors could choose whether to buy it or avoid it.”

SEC trying to get it right

While it seems like the SEC has taken a hard stance against exchanges applying to launch Bitcoin ETFs, it is worth taking a step back and looking at their overarching rhetoric on the topic.

This latest decision to review the findings of its own staff suggests that the regulatory body is performing a bit of a juggling act.

As SEC CEO Jay Clayton said in February, the organization would like to create an environment that encourages growth in the space while protecting investors from fraudulent practices and scams:

“Simply said, we should embrace the pursuit of technological advancement, as well as new and innovative techniques for capital raising, but not at the expense of the principles undermining our well-founded and proven approach to protecting investors and markets.”

Thus the very issues that the SEC is trying to address could well be answered through the use of cryptocurrencies and blockchain technology.

Conventional exchanges are kept in check by auditors and legal entities, which ensure that markets are protected from irregular or fraudulent behavior of exchanges. This is where Gün Sirer thinks blockchain tech and cryptocurrencies could revolutionize the space:

“Crypto assets are special and different. It’s possible for us to implement technical measures that can prohibit such malfeasance by construction. That is, crypto has the opportunity to not only meet, but exceed the standard to which the SEC holds Wall Street. We can lead the world here and lead every other asset class through judicious and careful use of technology, and facilitate the tokenization of conventional assets in the process. Of course, this requires a switch away from blind speculation in rigged markets, toward better technological developments. The sooner the crypto community gets behind a unified push to clean up exchanges and implement better, high-assurance decentralized exchanges, the sooner SEC-approved ETFs will become a reality.”

Market volatility

The SEC’s announcement that it would review its initial finding had a notable effect on the cryptocurrency markets, with Bitcoin rebounding after an slight pull-back following the original rejection on August 22.

It marks a week of volatility, which was also influenced by China’s latest crackdown on cryptocurrency-related events in certain parts of Beijing. Bitcoin was trading at around $6,790 at the time of publishing.

Bitcoin 7-day price chart

Bitcoin 7-day price chart. Source: Cointelegraph Bitcoin Price Index

Posted on

Crypto Markets See Solid Upswing as SEC Promises to Review Recently Rejected Bitcoin ETFs

Friday, August 24: crypto markets have seen notable growth today, with all but one of the top 40 cryptocurrencies by market cap solidly in the green, according to data from Coin360.

Market visualization from Coin360

Market visualization from Coin360

Bitcoin (BTC) has seen solid growth, having surpassed the $6,600 price point, starting the day just over $6,400. The leading cryptocurrency is up around 3 percent over the past 24 hours, trading at $6,624 at press time.

August 22 Bitcoin plunged from above $6,700 to under the $6,400 price point, following news of new anti-crypto policies in China, as well as another series of application denials for several Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).

According to CoinMarketCap, Bitcoin and VeChain (VET) are the only two cryptocurrencies among top 20 coins by market cap that have seen some gains over the past 7 days, with Bitcoin up just 1.43 percent.

Bitcoin 7-day price chart

Bitcoin 7-day price chart. Source: Cointelegraph Bitcoin Price Index

The top altcoin Ethereum (ETH) is up about 2.7 percent today, trading at $280 at press time. Following a markable downward trend over the week, the second cryptocurrency by market cap has suffered a heavy-hitting 41 percent loss over the past 30 days.

Ethereum 30-day price chart

Ethereum 30-day price chart. Source: Cointelegraph Ethereum Price Index

Total market cap is slightly up today, mostly holding above the $210 billion mark over the past 24 hours. After dropping to as low as $203 billion August 22, the capitalization of all cryptocurrencies has grown to $214.7 billion by press time.

Total market capitalization of all cryptocurrencies, 7-day chart

Total market capitalization of all cryptocurrencies, 7-day chart. Source: CoinMarketCap

Among the top 10 coins, EOS (EOS) and Monero (XMR) have seen the most significant growth over the past 24 hours, up 4.7 and 3.9 percent respectively.  

Today’s solid upswing in the crypto markets comes following an announcement from the U.S. SEC that the Commission will review its August 22 decision to reject nine applications for listing Bitcoin ETFs.

Earlier today, CNBC’s crypto market analyst Brian Kelly predicted that the first Bitcoin ETFs will start operating in February 2019. According to Kelly, the world is getting “incrementally closer” to the first Bitcoin ETF approval, pointing at the bullish “sentiment change,” despite the recent application rejections.