Uprose Finmart — Will there be a successful ETF in 2019?

Throughout 2018, cryptocurrency investors tuned in daily to the latest Bitcoin ETF news. Many theorized that a Bitcoin ETF would arrive on the market no later than September. However, several Exchange Traded Fund applications were outright rejected by the U.S. Securities and Exchange Commission.

More frustratingly, approval of the last viable Vaneck and CBOE Bitcoin ETF application was postponed until December and then later until January. More recently, that application was withdrawn completely, only to be resubmitted on the 1st of February.

What is a Bitcoin ETF?

A Bitcoin ETF would have allowed Bitcoin to be bought and sold on Wall Street just like regular stocks, bonds, and securities. Different from Bitcoin futures contracts brought to market in 2017, ETFs would have allowed traders to invest in real Bitcoin, without having to go through the complexity of buying coins at exchanges.

If successful, cryptocurrency market commentators speculated that Bitcoin ETFs would result in institutional investors pumping money into the cryptocurrency market. A price boom would follow, and at one point, it was not inconceivable that the Bitcoin price might reach as high as $50,000 as a result.

Why Did Every Bitcoin ETF Fail?

In the United States, Bitcoin and other cryptocurrencies have been defined by the U.S. Commodity Futures Trading Commission (CFTC), as commodities just like gold and silver. Outwardly, it can, therefore, be argued that the U.S. Securities and Exchange Commission (SEC) had no real cause to reject Bitcoin ETF applications brought forward in 2018. However, the SEC did have a good reason.

ETFs track the real-time price of commodities. A key problem, with approving Bitcoin ETF applications, therefore, rested with the fact that many top cryptocurrency exchanges don’t share market trading data as fast, efficiently, or accurately as the SEC would like.

Were Exchanges to Blame for Bitcoin ETF Failures?

In the case of the first Bitcoin ETF proposed by the Winklevoss Bitcoin Trust, SEC analysts complained that the Bats BZX Exchange where the ETF would be listed didn’t share relevant trading data promptly enough with other exchanges like Binance. Left unchecked, this could have allowed the Bats BZX Exchange (and others) to manipulate Bitcoin market prices.

In an ironic twist of fate, the last Bitcoin ETF proposed by Vaneck and the Chicago Board Options Exchange might have been approved. This is thanks to pre-existing high trust in the CBOE itself. However, Vaneck and the CBOE recently pulled their Bitcoin ETF due to the January 2019 U.S. government shutdown.

What Does the Future Hold for Bitcoin ETF Applications?

At present, there is only one serious Bitcoin EFT application left for the U.S. Securities and Exchange Commission to consider.

Presented on January 10th by Bitwise Asset Management, the Bitwise ETF promises to draw prices from all top cryptocurrency exchanges. However, it may yet be months before the SEC decides on the Bitwise ETF application itself.

Will Institutional Investors Still Enter the Crypto Coin Market in 2019?

Many commentators believe that institutional investors will still enter the cryptocurrency market at some point. However, when and how this might happen is open for debate.

One emerging idea presented by our multi-asset trading platform UPROSE Finmart is to attempt to draw institutional investors away from Wall Street and onto new decentralized exchanges. Specifically, exchanges where Bitcoin and other Cryptocurrencies can be traded for tokenized foreign currencies and real-world commodities like crude oil. This would sidestep the need for SEC ETF approval, while also working to democratize trading itself.