The success of Bitcoin this year has piqued the attention of the mass media, but regulatory problems have troubled the cryptocurrency industry for years. When it comes to Bitcoin Exchange Traded Funds [ETFs], the US Securities and Exchange Commission [SEC] has a long tradition of refusing them.
Market participants expect that 2021 will be the year that BTC ETFs are eventually authorised by the US SEC. Lyn Alden, macroeconomist and founder of Lyn Alden Investment Strategy, was asked her thoughts about how and which one the SEC will choose.
In an interview with Peter McCormack, Alden stated:
“I assume one’s [ETF] coming and I admittedly don’t know how it works when everybody wants one. I don’t know how they [SEC] pick who gets to have one.”
As opposed to the closest asset class, such as cash, Alden found that the initial Gold ETFs were highly liquid, so customers who prefered the original firm for option trading ended up paying a higher fee. However, since there are more Gold ETFs on the market, demand is more favourable, but the other companies might not be as liquid.
“You could see that, to some extent, in the Bitcoin space you have multiple ETFs, once you’re allowed to use that asset class as an ETF.”
A the number of firms, including the investment company Fidelity, have filed for Bitcoin ETFs. Its affiliate, FD Funds Management, recently filed an S-1 with the SEC detailing its plan to finance the ETF. However, prior to Fidelity, there were over ten SEC filings for the same, including companies such as Valkyrie and New York Digital Investment Company LLC [NYDIG].
According to Alden, it is time for the SEC to approve the Bitcoin ETF, and the arguments they previously reported for Bitcoin being “too volatile” do not matter this time, considering the current state of the stock market.
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