Several bitcoin ETFs have filed proposals for SEC approval, but none was approved. 

There have recently been indications pointing toward a bitcoin ETF approval by the SEC.

A commissioner for the US SEC believes that a bitcoin ETF {exchange traded fund} will ultimately be approved.

But first, let’s take it from the beginning: what is a Bitcoin ETF?

What is a Bitcoin ETF?

An ETF is a marketable security that keeps track of stock indices, bonds, and a bundle of assets or commodities.

The price of an ETF share is susceptible to change throughout the day as they are traded and usually have an average volume and lesser fees.

Simply put:

An ETF is a certain type of fund that contains assets such as stocks, oil futures, bonds, foreign currencies, gold, etc..

It then divides the ownership of these assets into smaller shares.

Alright, I know you still do not understand it. I did not initially, too, so I will break it down further and include a 2 mins video.

Supposing you want to invest in gold and you have only $1,000.

A 400oz (12,5kg) gold bar is worth about $500,000.  That’s a lot.

What you can do is invest in Gold EFT; this is a company that has bought a large quantity of gold, stored it in a safe, and then sell shares of this gold.

The value of the share rises when the price of gold rises and drops when it drops.

This is safer because you can easily buy and sell the Gold ETF shares.

You don’t have to worry about the security of keeping the gold safe, and, lastly, you can invest in Gold with your $1,000.

I hope you now understand what ETF is. You can still watch this 2-minute video from the ‘marketplace.’

A Bitcoin ETF merely mirrors or mimics the price of the most popular cryptocurrency in the world.

This feature allows investors to buy into the fund without necessarily going through the rigors of trading bitcoin.

And since investors in the ETF are not directly investing in Bitcoin, they worry less about the storage and security problems and procedures.

But will this ever be approved?

Will a Bitcoin ETF be Approved?

Robert J. Jackson, the only Democratic Commissioner at the US Securities and Exchange Commission {SEC}, has said that despite rejecting several ETF applications in the past year, this string of rejections would ultimately end.

Discussing previous bitcoin ETF applications, Robert highlighted the Winklevoss twins’ bitcoin ETF application in March 2017 to signal how attitudes are changing in the market.

When the application was rejected in March 2017, the bitcoin markets saw some volatility, a thread that has largely decreased.

Jackson stated that there was a risk of price manipulation, and this could get people hurt enormously. He further claimed that the liquidity issues in the market were very serious.

SEC has, to date, refused at least 10 Bitcoin ETF proposals.

In August 2018, it turned down about seven proposal fillings from ProShares, GraniteShares, Direxion, amongst others.

However, the regulator said it would review the proposal fillings the day after.

There has been another SEC commissioner who has been even more optimistic about the probability of approving a Bitcoin ETF.

Hester Pierce said the Winklevoss twins’ proposed rule change satisfies the standards.

Thus, they should be permitted to list and trade its bitcoin-based exchange-traded product.

Pierce said that the SEC had to be mindful of its role.

This role, however, is not to be the one to determine which innovations and technologies get approved and those that don’t.

Last month, Cbeo withdrew its proposal due to the shutdown of the US government.

If approved, the proposal would pave the way for a Bitcoin-based ETF backed by SolidX and VanEck.

Conclusion

Amidst all the optimism, the SEC chairman, Jay Clayton, has come out to say that: