Over the past few weeks, many in the crypto industry have begun to expect a Bitcoin exchange-traded fund (ETF). Don’t ask us why, but in a hive mind-esque fashion, hundreds on Twitter have begun to call for the regulatory approval of such a vehicle, which has the potential to catapult the space to new heights.
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One lawyer, who specializes in cryptocurrency and blockchain, however, is telling us not to get our hopes up. Jake Chervinsky, as the lawyer formerly of Kobre & Kim is known, broke down his thoughts on the matter in a 17-part , which covered the complexities and nuances of this pertinent topic.Bitcoin ETF Hype Might Be Unwarranted
For those who missed the memo, last week, the U.S. Securities and Exchange Commission (SEC) dealt a blow to the cryptocurrency space amid the tumultuous price action. A document revealed that the financial regulator delayed its verdict on a Bitcoin ETF application from Bitwise Asset Management, exercising its right to extend a self-imposed deadline by an additional 45 days.
Although this was expected, what was odd was that the regulator didn’t comment a similar proposal from VanEck and SolidX, which was on the chopping block alongside Bitwise’s application. This, as aforementioned, has led to a flurry of rumors about the potential approval of the product, which has been an important subject in 2019. Because why would the SEC delay its verdict on Bitwise’s vehicle, but not comment on a seemingly similar product simultaneously?
Chervinsky says this is semantics. In the thread, he notes that postulating that this staggered issuance of verdicts is positive is nonsensical, and goes on to say that considering the context, “denial is far more likely than approval.”0/ This is no time for ETF hopium. If the SEC doesn't delay the VanEck bitcoin ETF proposal, the most likely result is rejection, not approval. The SEC delayed Bitwise last week, but still hasn't made a decision on VanEck. Here's why that's a bad sign for ETF bulls. Thread 👇 — Jake Chervinsky (@jchervinsky)
A Silver Lining?
While Chervinsky’s rationale is sound, especially considering that it’s his job to analyze such issues, some are still sure that an ETF for Bitcoin is well on its way. Just look to the rumors about the SEC’s Hester Pierce, who recently appeared at Consensus 2019 in New York to talk about why she wants the cryptocurrency ecosystem to gain access to such a product.Pierce is expected to speak at the ETFs Global Markets Roundtable on the date of the VanEck deadline. Although it isn’t clear what she will talk about, her status as the motherly figure in the space and as an advocate for new (financial) technologies has led some to that she will discuss cryptocurrency, specifically to speak on the (potential) approval of the VanEck vehicle. This, of course, sounds a bit too “hopium”-filled, but it isn’t out of the realm of possibility.
But in the end, do we even need a crypto-backed ETF? Let’s assume that an ETF never gets the seal of approval that many are begging for. Will cryptocurrency as a whole then fail?The answer: no. Many have come to the conclusion that an institutional-centric ETF, like VanEck’s and its ilk, isn’t as important as it once was. This is because there now exists other onramps and infrastructural plays that arguably have more reach, like Fidelity Investments’ custody and trade execution offering and Bakkt’s soon-to-launch futures contract, the latter of which is arguably just as good as an ETF.
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