The cryptocurrency industry took a significant hit on 8th August after the Securities Exchange Commission (SEC) failed to approve an exchange-traded fund for Bitcoin. Investors waited with baited breaths only to receive the disappointing news that VanEck’s third attempt to advocate for this ETF floundered, a move that triggered Bitcoin’s downward spiral. Within the first twenty-four hours, the value of Bitcoin plummeted by 6% trading at around $6300 from its peak of $20,000 at the close of 2017. This drop sent shockwaves across the industry, and perhaps there’s more to come.
At the start of 2018, the asset firm known as VanEck joined forces with a financial service- SolidX- to push for this groundbreaking financial product. This ETF is built on the premise of using real Bitcoins as opposed to leveraging futures and therefore, investors will not have to purchase the principal asset. ETFs are considered to be much safer compared to buying these altcoins on a cryptocurrency exchange medium.
This latest outcome must be frustrating for prospective investors who wish to venture into the world of cryptocurrency. While several entities have applied to have this ETF listed, it appears that the SEC is not convinced enough to greenlight the proposal. Investors the world over must be frustrated by this constant blocking due to various concerns by the regulatory body. Atop the list of hindrances is price volatility which is through the roof as seen with Wednesday’s trading. Secondly, customers can withdraw these funds too quickly and this may pave the way for security loopholes. Until these matters are adequately addressed, the SEC will keep blocking the Bitcoin ETF.
These issues notwithstanding, Jan van Eck is sold on the ETF idea and he goes on to declare that Bitcoin is ‘digital gold’ that will boost shareholders’ portfolios. The proposed ETF comes with an insurance component that will shield investors against known risks like sourcing and keeping these alternative coins.
Fortunately, not all hope is lost, and things could turn around much quicker. According to documents filed with the SEC, the VanEck SolidX Bitcoin Trust will sell their shares at a whopping $200,000 a piece. This figure may sound overly ambitious to pundits, but SolidX says that they are focusing on institutional investors and not the retail kind. The company’s chief executive, Daniel Gallancy confirmed this during a telephone interview with CNBC. Furthermore, he noted that once the regulatory filings are accepted, the ETF will go live in early 2019.