After Winklevoss brothers, it is VanEck-SolidX that has hit the roadblock, created bythe Securities and Exchange Commission (SEC), in its path to launching a bitcoin ETF. The SEC has deferred the decision on the proposed bitcoin ETF to Sep 30 (read: SEC Disapproves Winklevoss Bitcoin ETF: What Next? ).
In late July, the regulatory body forbade an application by the Winklevoss brothers to come up with a bitcoin ETF, finding the product not safe enough for investors. Bitcoin dropped sharply on Aug 8 due to the SEC's latest decision.
In fact, more than $9 billion bitcoin's value was wiped out after SEC's decision of postponement, per an article published on CNBC.com. Bitcoin prices have been gathering steam in recent weeks (before the Winklevoss brothers'decision) on rumors that the SEC could give a nod to a bitcoin ETF as early as August.
It was VanEck's third attempt for a bitcoin ETF and the company has collaborated with blockchain company SolidX this time. The plan is to make the product physical and not futures based. This means the product will hold actual bitcoin, which will be " insured against any loss or theft ." The VanEck SolidX Bitcoin Trust will have "XBTC" as the ticker symbol (read: Will VanEck's Renewed Attempt to Launch Bitcoin ETF Work? ).
There are a few factors that seem positive about the formation of XBTC. First, the underlying currencies will be insured, which makes it insulated against any kind of a hacking attack. Secondly, the issuers purposely kept retail investors far from the proposed fund, which reduces the broad-based risk factor associated with this kind of a product (read: Will the SEC Finally Approve Bitcoin ETFs? ).
Will SEC Give a Nod?
Hopes were high about a probable bitcoin ETF debut this year since December 2017, when Cboe Global Markets launched three bitcoin futures contracts on the Cboe Futures Exchange. But SEC has so far been stringent on ETF launches.
The SEC will now give its final verdict on nine proposed ETFs in the next two months . But SEC is worried about its extreme price volatility in cryptocurrencies. Several central banks issued warnings against it.
Some fear that cryptocurrencies may be used to escape taxes, launder money or finance terrorism. AlphabetGOOGL banned bitcoin advertisements to prevent scams while advertisers that are okayed by Facebook via an application process can endorse crypto products. However, Facebook prohibits advertisements encouraging binary options and ICOs .
Try Blockchain ETFs
There are Blockchain ETFs available in the market, namely Reality Shares Nasdaq NexGen Economy ETF BLCN , Amplify Transformational Data Sharing ETF BLOK and First Trust Indxx Innovative Transaction & Process ETF LEGR . These funds look to track a portfolio of stocks from companies that are deemed to have strong exposure to blockchain technology development. But the issuers are not allowed to use the word "blockchain" in the name (read: Forget Bitcoin, Bet on Blockchain With These New ETFs ).
As per a source, "the blockchain in Bitcoin literally acts a ledger; it keeps track of the balances for all users and updates them as money changes hands." So, if investors are not getting a bitcoin ETF now, they can definitely be in touch with the concept through blockchain ETFs.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.