Bitcoin Price Drops As US SEC Postpones Bitcoin ETF Decision
Bitcoin prices experienced a sharp drop on Wednesday as the U.S. Securities and Exchange Commission (SEC) announced a delay in its decision on a proposed bitcoin exchange-traded fund (ETF) until September 30. The Cryptocurrency markets fell as a result and according to data from CoinDesk, Bitcoin traded at just over $6,300, around 6 percent down from 24 hours ago at 4:12 p.m. New York time.
What is Bitcoin ETF
Exchange-traded funds are securities that track the price of an asset and is listed on an exchange. Many consider ETF’s a safer, smarter way for institutional investors to get involved with cryptocurrency, rather than buying bitcoin on a crypto-asset exchange. ETF shall serve as a pivotal step for the mass adoption of cryptocurrencies as regulated investments.
Earlier this year, investment firm VanEck collaborated with Solid X, a financial service company to launch an ETF that is backed by actual bitcoins rather than futures. The fund under consideration is expected to list on the Chicago Board of Exchange (CBOE) BZX Equities Exchange. The decision for the same was to be released on August 10 and now SEC has almost two more months to consider a proposed rule change by CBOE Global Markets Inc. that would allow the fund to list.
According to an official document by the SEC released on August 7, Wednesday, more than 1,300 comments were received by SEC regarding the proposed rule change to list and trade shares of Bitcoin ETF. The document states:
“Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,6 designates September 30, 2018, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change (File No. SRCboeBZX-2018-040).”
The first announcement of VanEck and SolidX’s physically-backed Bitcoin ETF was made on June 6. The price of each share of the VanEck SolidX Bitcoin Trust is set to $200,000 as per the SEC filing. This is VanEck’s third attempt for approval, having been rejected by the SEC twice previously. On this occasion, the SEC said that it is pushing out its decision until September 30.
Several applications have been submitted to the SEC to get a bitcoin ETF listed, but the regulatory hasn’t approved any so far. A second attempt by Winklevoss Twins’ was recently rejected by the SEC. The agency cited that the principal reason for refusing the application is largely due to the unregulated nature of Bitcoin markets. SEC stated:
“When the spot market is unregulated — there must be significant, regulated derivatives markets related to the underlying asset with which the Exchange can enter into a surveillance-sharing agreement.”
The industry experts expected a similar result from SEC’s side, in fact, in their recently released quarterly report the Canadian wealth managers Canaccord Genuity predicts the approval to get delayed up till 2019
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