Exchange-traded funds (ETFs) based on actual Bitcoin (BTC) are not bound to come anytime soon. Two analysts shared their outlooks while discussing the possibility of the US Securities Exchange Commission (SEC) approving a physical BTC ETF. The discussion came after the SEC rejected VanEck’s BTC ETF application on Friday, saying it is not convinced BTC’s market is free of manipulation and fraud.
According to Anna Paglia, Invesco’s head of ETFs and indexed strategies, the firm decided to withdraw its BTC futures ETF and focus on an ETF based on actual BTC. Explaining why Invesco pulled out of the race to launch a BTC futures ETF, she said the company feels the market does not need such a product at the moment, seeing as two ETFs based on BTC futures are already live.
Commenting on the SEC’s rejection of VanEck’s BTC ETF application, Paglia said,
I wasn’t surprised that the SEC rejected the application last week. Issues like price manipulation and fraud have not been addressed yet. I do think that some more regulation is something that the SEC is expecting before approving the next application, but I’m counting on 2022 as the year for a pure-play ETF.
Explaining why she believes the SEC might approve a physical BTC ETF in the coming year, Paglia said the SEC cannot limit investors from accessing markets. For instance, American investors can purchase pure-play BTC ETFs through private markets in Europe and Canada. As such, Paglia believes the SEC’s denial of physical BTC ETFs in the US is not actually protecting investors.
Regulating the market to the SEC’s liking might take longer than expected
Despite hoping that the crypto sector reaches this milestone in the coming year, she agreed that her timeline could be wishful thinking.
Agreeing with Paglia on the matter of ETFs backed by BTC futures, Dave Nadig, the Chief Investment Officer & Director of Research for ETFTrends, said the market does not need a lot of players offering the same product. Pointing out what would push the SEC to approve a pure-play BTC ETF, Nadig said comprehensive crypto regulation would do the trick.
However, he does not see the crypto space achieving this feat anytime soon. Unlike Paglia, Nadig believes the SEC might take more than a year to approve a pure-play BTC ETF.
According to Nadig, Coinbase’s proposal for the US to create a single regulator for the crypto space is a brilliant idea. Regardless of whether Washington will heed this call or designate another regulator to deal with the digital asset industry, Nadig claims clear regulation of the coin markets is the only way to cross the hurdle that prevents the SEC from approving pure-play crypto ETFs.
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