- The Securities and Exchange Commission has postponed a decision on the first bitcoin exchange-traded fund for a second time
- The latest action comes as SEC Chairman Gary Gensler urged for additional cryptocurrency exchange regulation and investor protection
- Meanwhile, corporations in the United States are releasing bitcoin-related funds to fulfill the rising demand
During a speech at an online conference called The B Word on Wednesday, Securities and Exchange Commissioner (SEC) Hester Peirce expressed her continued support for the regulator’s approval of a bitcoin exchange-traded fund (ETF). In the United States, a bitcoin ETF would allow ordinary investors to participate in bitcoin without having to go through the time-consuming process of obtaining and securing cryptocurrency.
While the Securities and Exchange Commission delays approval of bitcoin exchange-traded funds, some companies are looking for other methods to meet the surging demand for cryptocurrencies among investors. According to the filing, the SEC pushed another decision on Van Eck’s bitcoin ETF on Wednesday, extending the review and asking for feedback on the proposed rule change.
BITCOIN PRODUCTS ARE IN HIGH DEMAND
While the SEC may take some time to approve bitcoin ETFs, other cryptocurrency-related funds are gaining traction in the meantime. Invesco, for example, has filed to launch a pair of crypto-linked ETFs, the Invesco Galaxy Blockchain Economy ETF, and the Invesco Galaxy Crypto Economy ETF, respectively. These ETFs invest in digital currency-related holdings, such as mining and technology companies, rather than direct exposure to bitcoin or cryptocurrency.
According to certified financial planner Ivory Johnson, founder of Delancey Wealth Management in Washington, you can buy bitcoin or you can buy some of the companies that benefit the bitcoin ecosystem. Although these crypto-related ETFs are less volatile than digital assets, he believes they offer less upside potential. It’s similar to buying a health-care ETF, according to Johnson. Someone may decide to invest in the pharmaceutical or biotech sector, which is riskier.
PEIRCE’S VIEW ON THE CRYPTO BUSINESS
While many commissioners are wary of the cryptocurrency business, Peirce has acquired the moniker Crypto Mom for her conviction that the United States is long overdue for authorizing a bitcoin ETF. She received praise from the community in particular for her passionately worded dissents to rejected bitcoin ETF applications. She also reintroduced a Safe Haven proposal this year, which would provide crypto businesses a three-year grace period to become decentralized and meet other conditions before being completely beholden to US securities regulations, in order to spur innovation.
When asked about moving forward with a bitcoin ETF, Peirce pointed to Canada’s adoption of both a bitcoin and an ether ETF as a model the US may follow. Several bitcoin and ether (Ethereum’s native currency) ETFs have been trading in Canada for several months.
Peirce also expressed concern that the crypto business is being compelled to follow a different set of laws than the rest of the world, perhaps overstepping its bounds. We are not a merit regulator, so we shouldn’t be deciding whether something is good or bad. An investor is thinking about their entire portfolio, and sometimes we think in one-off terms of a single product, and we forget that people are building portfolios.
During the initial crypto boom in 2017 and 2018, the SEC routinely rejected bitcoin ETF applications, citing the market’s vulnerability to fraud and manipulation. However, since then, the industry has grown, built regulated derivatives markets, and established institutional-grade custodians, resulting in an influx of professional investors. In addition, the SEC has a new chairman, Gary Gensler, who has previously expressed support for bitcoin.