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When Can The First Crypto-Based ETF Fructify?

The debate on bitcoin exchange-traded fund (ETF) can never end until the Securities and Exchange Commission (SEC) gives its green signal. That is because even in the latest development, the regulator has only maintained its position on rejecting nine applications for ETF with a focus on digital currencies. Within the virtual asset sector, the debate is heating up through the agency is firm about its stand. At the same time, investors and traders also worry as to when can they expect an ETF if the applications are continuously rejected.

Lack of Size

The SEC has delivered three 26-page verdicts on nine ETF proposals from GraniteShares, Direxion, and ProShares. The regulator has feared not only about manipulation, but it was also concerned about the lack of significant size of bitcoin markets, newsbtc.com reported. In any case, the decision was only on the expected lines. After the agency’s ruling, CNBC’s “Fast Money” has tried to do its best to weigh in on the crypto-powered ETFs current state of affairs.

BKCM CEO and CNBC’s ‘crypto baller,’ Brian Kelly, has launched an episode on the digital coin sector. He was not surprised by SEC’s decision on nine applications for crypto ETFs. On the other hand, he expects the SEC to first confirm an ETF application in February next year. He had his reason to back up his guess. His contention is that the SEC has time until February in respect of VanEck application for an ETF through the agency has postponed its decision to September 30.

This meant that Kelly thinks that the SEC will most likely push a decision to February. Significantly, bitcoin proponent, Charlie Shrem, told a conference in San Francisco that the market is not ready for an ETF currently. He also believes that the crypto market is too manipulatable. Therefore, he sees the possibility of an ETF with a focus on digital coins next year only.

It is also quite clear that several industry leaders are not ready to accept that the virtual currency market is not ready for a full-fledged ETF yet. Kelly wanted the SEC to assess a way that could survey the market accurately before giving any approval to ETF. Such a survey could help to ease the risk factor of market manipulation, as well as, trading fraud.

Futures Should Mature

The crypto analyst thinks that bitcoin futures market should mature citing that the regulator has not yet put its complete faith on the sub-industry. This could mean that the futures have generated near nil support though CME-supported bitcoin futures have witnessed 85 percent jump in open interest positions. If the trend continues, the futures market will turn out to be strong if the ETF rollout happens in February.

Kelly summed up saying “If you look at where the demand for this product is coming from, it’s from the retail investor. Institutional investors are knocking on my door, but they haven’t pulled the trigger yet. But, the retail investor has already said that they want to buy this… and there’s about $50 trillion of assets under management (AUM)… It would only take a small portion of that to go into a Bitcoin ETF, that could spark a nice rally in Bitcoin.”

Joel is an entrepreneur specialized in the international business development and project management. He graduated from Indiana University’s Kelley School of Business with a degree in Finance and International Business. He is currently working on decentralized autonomous organization (DAO) along with SocioVibes.