cryptocurrency etf, bitcoin etf, cryptocurrency regulations, bitcoin regulations

With A New Proposal For Cryptocurrency ETF, How Likely Are We To Get Our First ETF?

Disclaimer: This is a guest post by Azman Nabi

Crescent Crypto Index Services LLC filed a new prospectus of a cryptocurrency-based exchange traded fund (ETF) to the SEC on May 9, 2019. 

The proposal is sponsored by the United States Commodity Funds (USCF). The proposal is for Crescent Crypto Index Fund which will have the ticker symbol of XBET. Information is that it will be traded on the NYSE Arca stock exchange. 

The previous two proposals are still under review, and here we have got a new entrant. In such a scenario, will the XBET get approved or will it share the same fate as the proposals of Bitwise and Vaneck SolidX? Let’s find out.

History Of ETF Proposals

The first ever ETF proposal was Bitwise Bitcoin ETF. The proposal was issued on January 28, while the proposed rule change was published in the Federal Register on February 15. March 29: SEC designated the date for the decision May 16. However, complexities dived in and the deadline was shifted to August 14. Now, the deadline can be changed one more time to October 13 maximum, upon which SEC will no longer be able to shift the date.

The Vaneck SolidX Bitcoin ETF was filed by the Cboe BZX Exchange Inc. in June last year. However, it withdrew its proposal on January 22 due to the US government shutdown. The proposal was refiled on January 30 and got published in the Federal Register on March 29. SEC extended the review period till May 21. On May 20, SEC further extended the deadline to August 19 and now can further the deadline to October 18 at max.

Evidently, both of the proposals are still under review. The third proposal od XBET has not even published in the Federal Register and awaits a response from SEC. Therefore, no crypto-backed ETF has been successful in making it to the exchange. 

The two proposals are open for comments on the SEC site for the public. You can read the comments and even publish your own.

For VanEck SolidX Bitcoin ETF https://www.sec.gov/comments/sr-cboebzx-2018-040/cboebzx2018040.htm

For Bitwise Bitcoin ETF

https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca201901.htm

As of now, there is no official information around XBET ETF. 

What Is The Future?

Source: https://twitter.com/jchervinsky/status/1130209159503319040

Jake Chervinsky is a securities lawyer. He believes that we will not be seeing cryptocurrency based ETFs anytime soon. According to him, this is not the time to deal with ETF, and it is highly likely that the proposals will be rejected, if not further delayed.

The US Regulations and SEC are still dealing with cryptocurrencies as a whole. They are still facing issues with classifying cryptocurrency, whether it is a security, or a commodity, or a new class of assets. 

The SEC staff has recently published a 14 pages framework to assist crypto token issuers with performing a Howley analysis, which aids in categorizing the token offerings as securities or not. Such delays in important tasks are putting the US behind other fast-forward thinking countries. 

In a recent interview, SEC commissioner, Hester Pierce, commented on the regulations around Bitcoin ETFs. 

She showed her dissatisfaction with current law by saying,

“I thought the time was right a year ago — even longer than that … My first chance to comment on it was a year ago … Certainly, the time is right, but there are still questions floating around the SEC that need to be answered as much as possible by you all.”

She also showed her concern that the US is falling behind other countries in terms of innovation. 

She said,

Our country has always been a country where innovation can really thrive. I worry that a lot of the activities are now happening offshore. I want the US to be the market for innovation.”

With such perspective of the commissioner, we can expect that the SEC will expedite its processes and clear all the doubts prevailing around the cryptocurrency scenario. 

We saw both the sides of the concerns around ETFs’ approval, on one hand, experts are pessimistic and the SEC seems to already have its platter full. While on the other, SEC Commissioner seems to be worried about the slow progress as well. Nothing can be clearly said about the proposals before the SEC makes the final reviews in August or maybe delay further.

Image by Clifford Photography from Pixabay

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