The U.S. Securities and Exchange Commission (SEC) has once again taken a tough stand against approving bitcoin Exchange Traded Funds (ETFs), as the new chair, Gary Gensler, places the protection of uneducated investors under scrutiny and claims ‘gaps’ in current proposals.
The SEC has a long history of prolonged applications and delays in the approval of bitcoin ETFs. Still, fund managers placed renewed hope in Gensler as he’d previously lectured on blockchain technology at MIT. Yet, in his position as chair, he’s taken a similar approach to his predecessors, exercising extreme caution and highlighting the potential risks for investors.
There are at least a dozen bitcoin ETF applications currently under review, from the likes of Fidelity, WisdomTree, Wilshire Phoenix, VanEck and SkyBridge Capital. Not exactly small-fry fund managers!
Ultimately, though, this will come down to the regulation of a notoriously unregulated circa US$2 trillion market. Even though the focus is on the ETF application process and requirements, it appears the SEC wants to see broader regulation and oversight of cryptocurrency in general, including exchanges. Gensler’s comments hint that if exchanges were better regulated, there would be less reason to decline ETF applications.
On this side of the pond, though, the Financial Conduct Association (FCA) placed a ban on cryptocurrency derivatives entirely, which came into effect in January 2021.
“… the FCA has made rules banning the sale, marketing and distribution to all retail consumers of any derivatives (i.e. contract for difference – CFDs, options and futures) and ETNs that reference unregulated transferable cryptoassets by firms acting in, or from, the UK. - Source”
And while not exercising full regulation just yet, companies that conduct specific cryptocurrency-related business must register with the FCA and apply certain regulatory practices, such as KYC and AML processes. (And, yes, that includes Bitstocks!)
At the end of the day, while many still view bitcoin and cryptocurrency as a means to escape centralised or governmental ‘control’, this was never the true intent.
It’s becoming more evident that businesses willing to work with the regulatory bodies and within the law will position themselves for long-term viability. And that’s in the best interest of both the potential investors and the bitcoin space in general.