The SEC, the US stock market policeman, is blowing hot and cold on bitcoin-backed listed index funds (ETFs). A few days after giving the green light to the listing of two ETFs (ProShares Bitcoin Strategy and Valkyrie Bitcoin Strategy), he has just rejected the request filed by Cboe BZX, an alternative exchange, to list VanEck’s Bitcoin Strategy ETF fund. The decision surprised observers and asset managers.
The recent authorization of the SEC to market two ETFs has in fact been interpreted as a sign of a relaxation of its position on this ETF issue, which has been dragging on for several years. The powerful SEC boss had already opened the door to dedicated funds this summer during his first speech on cryptocurrencies. The first two launches in the United States were therefore considered as the prelude to an avalanche of ETFs on bitcoin, especially since they were very successful with investors.
However, many institutional investors, such as pension funds, cannot in fact invest directly in cryptocurrencies but only via ETFs, which are themselves exposed to cryptocurrencies via futures contracts. The main advantage of ETFs is that these products trade on a regulated market like any stock, without going through the complex process of buying and selling a cryptocurrency.
Risk of fraud and manipulation
As a reminder ; it is not necessary to obtain a visa from the SEC to launch an ETF but, on the other hand, the market policeman can oppose its marketing within 75 days. This is what happened with the VanEck ETF.
The regulator justified its decision by considering that Cboe BZX did not have sufficient safeguards to prevent possible fraudulent transactions or attempted manipulation (” wash trading ”) Of the bitcoin market. An argument regularly put forward by the SEC for ten years to block requests to launch ETFs on cryptocurrencies.
Several ETFs are currently awaiting a decision from the SEC to start trading, which will undoubtedly make it possible to forge a real doctrine of the market policeman on these products. In the meantime, all the major ETF providers are on a war footing to launch themselves into this promising market.
