The bitcoin ETF offerings from VanEck, Bitwise, and United States Bitcoin and Treasury Investment have each been under consideration for months, and the SEC is pushing its decision out to the maximum amount of time permitted under federal regulations.
Why Isn’t The SEC Moving on Bitcoin ETFs?
The SEC has not given any reason for the delay on the bitcoin ETFs, nor is it required to. However, we can surmise what’s going on inside the Commission.
Ed Butowsky, Managing Partner at Chapwood Capital Investment Management, tells CCN:
“Bitcoin isn’t a security. The SEC’s definition for security requires that the thing being traded is representative of something else of underlying value. Bitcoin has no underlying value. It isn’t real.”
Lee Reiners, Director of Global Financial Markets Center at the Duke University School of Law, told the SEC that a bitcoin ETF isn’t needed. ETFs exist because the underlying assets (like corn or wheat) are neither feasible nor desirable to take possession of but rather:
“…It is easy for investors to acquire and store bitcoin because bitcoin is a digital asset”.
Reiners also said the market is loaded with fraud and manipulation and there is no true manner of price discovery because of the Wild West nature of bitcoin (as echoed by this SEC Rule Comment) as well as its volatility.
There’s No Real Price Discovery in Bitcoin
That’s exactly the reason why, Reiners said, the SEC killed the Winklevoss bitcoin ETF.
Indeed, in their rejection, the SEC said that there was no regulatory data source to reflect the price of bitcoin, nor that the net asset value of the Winklevoss product would reflect an authoritative price.
Other commenters, such as SolidX Management LLC which supports the VanEck product, took more of a wonkish approach.
SolidX tried to sell the argument that the SEC’s mission, which is to protect investors, is served by approving the bitcoin ETFs. They lay out numerous technical arguments that hardcore enthusiasts may find interesting but are couched in the central conceit that the many requirements of the Securities Exchange Act of 1934 are met by the VanEck product.
The SEC Will Never Approve Bitcoin ETFs
Ultimately, the reason the SEC will kill bitcoin ETFs lie in Treasury Secretary Stephen Mnuchin’s press conference a few weeks ago.
The United States wants nothing to destabilize the U.S. dollar as being the world’s reserve currency.