The proposal for the approval and administration of Bitcoin ETFs (exchange-traded-funds) has been a debated and potentially entangling issue in the world of cryptocurrency (highlighted often since the Bitcoin spike to $20000 in late 2017).
The approval of even a single BTC ETF would be a groundbreaking development in the world of cryptocurrency and blockchain technologies. Whilst BTC would be the only asset approved in the early days for trading (but not limited to modalities of trading, i.e.. the potential availability of options trading, which leaves enormous wealth to be sought) ETF approval by the SEC (Security and Exchange Commission) would not only bring cryptocurrency to the forefront of business discussions from Wall Street to Japan, it would additionally bring a level of legality, oversight, and legitimacy to the “cryptosphere” which has been thus far lacking.
The very problems that have delayed ETF approval (market volatility, market manipulation, insider trading, money laundering, unregistered and unauthorized trading on certain exchanges, etc.) would actually decrease said negatives, as a direct result of SEC oversight and influence.
Such an event would push out the more nefarious parts of BTC and cryptocurrency use, as monitoring would be constant, thus crypto no longer acting as a tenable option for consistent illegal use. While the BTC blockchain offers a level of anonymity, all transactions and transfers are recorded, therefore with proper oversight, BTC could be brought into entire upright legal standing. What I have described herein in all likelihood will be the ultimate outcome in no more than a year (some continue to hope for the SEC “blessing” of BTC exchange-traded funds before January 2020, which frankly seems overly optimistic), with February to May of 2020 being a potential industry-altering stretch of time.
Although ETF approval is coming to the forefront of investor discussion again, the truth is that the Federal Government, along with the long-standing and highly influential Federal Reserve, has and will continue to attempt to drag their feet regarding the entire crypto market, and delay subsequent legislation that would more fully develop and legitimize the trading of such assets. BTC is a major threat to central banks and “big” data, so such a hypothesis does hold logic (from the point of view of the central banks and “big” corporations, delaying this decentralization wave seems only natural, as the whole premise of cryptocurrency undermines current systems).
Regardless, several ETF applications are currently pending, just waiting for the day the SEC wakes up to the fact that investors will not let BTC and blockchain simply die out, thus [the SEC] being forced into approving a BTC open market trading fund and Congress having to address crypto, subsequently creating new and individualized legislature. Such events would advance the industry, from a US perspective, acting like a colossal step forward.
Thus far we have discussed what exactly an ETF approval would do for crypto and blockchain (FYI, on the stock exchange ETF’s are available to invest in much like a stock, without necessarily having assets held by said fund), as well as the concept that the private equity collected in such mutual trading funds would act as a catalyst for boundless growth.
The reason this topic is of relevance today, in particular, being that within the past 5 days there have been two new developments in regards to ETF approval. Firstly, VanEck SolidX, a corporation which has had several ETF applications denied, has now found a manner in which to operate similar to an ETF, without officially grabbing the title, nonetheless displaying the potentialities.
VanEck has gotten a deal approved with the SEC in which total independent oversight has been given to the SEC itself, with mutual funds being traded OTC (over-the-counter), not on a public exchange, but through private reserves held by the company itself, acting as a precedent for an independent and bold move forward.
The fact that the SEC even agreed to such an arrangement is a clear indication of the coming future, with VanEck possibly holding the keys to BTC ETF approval in its proverbial hands at this moment. Should all go well, it would provide a new level of surety for the SEC and the US Federal government as a whole, demonstrating that this market can be maintained and kept just as “pure” as stocks or other commodities and assets that are publicly traded.
While VanEck would only take clients on the larger magnitude of investment, it would be “one small step for VanEck, one giant leap for all of crypto,” a true gauge of the possibilities of this market. In addition, an example would be provided for how to keep everything under control, meaning the least amount of illegal practices actively occurring.
The second major factor in a potential bump higher in BTC price, thus once again a move forward toward ETF approval (higher BTC price always pushes the issue), may result from the Federal Reserve dropping interest rates once again later this week. Such a move by the largest central bank in the US exemplifies the weakness and invalidity of our current monetary system; interest rates are only dropped when the generation of more loans is desired so as to artificially boost an economy (I.e. sub-prime mortgages being given which create better figures on paper, but in reality are a detriment to any economy). Any event which demonstrates this unfortunate truth, how we currently have a hollow monetary system, helps to push BTC agenda forward, with ETF ranking high on the list of firsts to be completed.
In summary, while the world may be heading towards a global recession, as I’m sure many of you have now heard speculation of, Bitcoin/cryptocurrency and blockchain technology have nowhere to go but up (in the short term of the next couple years we may see dips here and there but in the long term undisputedly higher value).
This is a market which must be viewed on a 10-20 year scope so as to have a clear perspective of its full potential. Just ponder, if BTC is currently trading at the moment of my writing this piece at approximately $10300, what will its USD equivalent be when major institutional and private equity investment come pouring in? Additionally, BTC mining rates will halve this coming May, essentially meaning that the supply being data-mined, i.e. brought into existence through the use of algorithms from the BTC blockchain which is stored in the cloud and accessed in a decentralized fashion from anywhere in the world, will be half that generated by the same hashrate (or in laymen’s terms, processing power) of the present moment.
The basic laws of supply and demand strongly suggest that the price should rise. With an asset that is limited to a set quantity, that being 21 million coins that can ever be data mined (currently over 87% completed), an entirely unique concept in the history of money/wealth transference itself (generally the ability to create more of an asset is always possible, so that high liquidity and trading volume can be adjusted for when an asset is scarce and in demand), has been presented. From my perspective, for the long term holder, as well as the day trading speculator, there are limitless advances possible (and probable) to be had in crypto.