Why are cryptocurrency ETFs repeatedly defeated? How long can the US SEC hesitate to delay?
Cryptocurrency ETFs are an old topic that has stoked people’s appetites. Every once in a while, people will always hear: a certain company has submitted an application for a cryptocurrency ETF to the SEC. After a long wait, the answer is always the same: the US SEC delays the approval of the application for cryptocurrency ETFs, or repeatedly solicits opinions from the society, and so on, forming a closed loop similar to an endless loop.
What is a cryptocurrency ETF? Why do companies or funds continue to apply to the SEC in the United States? Despite repeated defeats, they continued to fight. And why is the attitude of the US SEC always ambiguous? What is he hesitating? Now the editor will do some sorting out.
What is a cryptocurrency ETF?
ETF is a trading open-end index fund, usually called an exchange-traded fund. It is an open-end fund with variable fund shares listed and traded on an exchange. After the 2008 international financial crisis, ETFs have become the most popular investment tool in the investment field, and are therefore known as one of the most successful financial products in the global financial market. The U.S. ETF market is directly regulated by the U.S. Securities and Exchange Commission (SEC).
The cryptocurrency ETF will break the barriers between the traditional investment market and the cryptocurrency market, allowing ordinary investors to touch cryptocurrencies in the traditional investment field. In other words, ordinary investors can legally and compliantly access Bitcoin and other cryptocurrencies in the securities market through cryptocurrency ETFs, without having to use private keys in the cryptocurrency market, etc., to indirectly participate in Bitcoin investment in mainstream stock exchanges, without worrying at all. Common legal compliance issues in the cryptocurrency field. Therefore, whether a cryptocurrency ETF can be approved is an important sign that cryptocurrencies are moving towards compliance and attracting more traditional investors.
Currently, the existing cryptocurrency ETFs around the world are mainly in Canada and Brazil, such as the Bitcoin ETF owned by Purpose Investments in Canada, the first reverse Bitcoin ETF listed in Toronto, and the 3iQ CoinShares Bitcoin launched by the Canadian digital asset management company 3iQ. ETF and the Bitcoin ETF of QR Capital, a Brazilian blockchain investment company, etc.
The reason why US ETF applications have received widespread attention is that the size of the US financial market and its status as an international financial center are determined. Early applications for cryptocurrency ETFs in the United States were mainly companies engaged in cryptocurrency trading. Later, funds and companies from the traditional investment community in the United States gradually joined. Especially since this year, asset management companies and investment banks in the financial industry have begun to intensively enter Markets, such as American asset management company Victory Capital, asset management company Simply, Ark Investment Management, Swiss cryptocurrency ETP issuer 21Shares, etc., such a concentrated large-scale application for cryptocurrency EFT is a blowout , These companies and institutions have taken a fancy to the astonishing growth of cryptocurrencies such as Bitcoin and Ethereum after entering 2021, and their intention to share the pie is very obvious.
The eye-catching features of cryptocurrency EFT
1. Security, convenience, and legality
Based on various factors such as policies, regulations and market environment, the risk of directly buying encrypted currency is quite high, and holding encrypted currency may also encounter hacker attacks on the chain.
Rather than buying cryptocurrencies directly, cryptocurrency ETFs provide exposure to changes in cryptocurrency prices. On the one hand, users bypassing cryptocurrency exchanges to purchase cryptocurrency ETFs can avoid problems such as exchanges running off, shutting down, and being hacked. On the other hand, users do not need to know and use private keys, so they do not need to worry about the risk of theft, and they do not need to buy and learn how to use hot and cold wallets, which is relatively more convenient.
More importantly, the adoption of cryptocurrency ETFs can greatly enhance the liquidity of mainstream cryptocurrencies in the global market. This means that in countries that have adopted cryptocurrency ETFs, institutions and general investors can safely and efficiently trade cryptocurrency assets. , Without worrying about violations of laws and regulations. In short, ETF approval will greatly reduce the entry barrier for cryptocurrencies.
2. Safety and compliance under supervision
Cryptocurrency ETF funds will be fully regulated before they are listed on major platforms such as Nasdaq or the New York Stock Exchange, which creates a legal aura for cryptocurrency ETFs. Cryptocurrency ETFs under the normal supervision of national regulatory agencies will enable cryptocurrencies to gain wider attention, and more people will turn to this market.
Although many companies and institutions have made multiple application attempts over the years, the US SEC has yet to pass any application.
What is the US SEC hesitating?
Legal compliance may be an important reason for the SEC’s hesitation.
The regulatory positioning of cryptocurrency in the United States has always been undetermined, which has become the biggest obstacle to the approval of cryptocurrency ETF applications.
For a long time, what kind of regulatory stance should the U.S. regulators adopt on cryptocurrencies and the market? What laws and regulations are issued? And whether to tax it? Questions such as how to define the market and industry standards have always been at a level of confusion and vagueness, and there has been constant debate but there has been no clear answer.
In this situation, the SEC does not have specific laws and regulations to refer to, and it is more of a regulatory agency at the level of approval and supervision. This means that it is difficult for the SEC to make legal and “The word Jue goes to the end.
“Controllability” may be another important factor.
Recently, a U.S. Congressman Bill Foster said: The government must have the right to reverse cryptocurrency transactions that have already been completed. He said that many members of Congress believe that cryptocurrency users are actual participants in criminal activities and therefore must pass laws to allow the U.S. Federal Court to find digital asset holders and then invalidate transactions completed with Bitcoin and other digital currencies.
This shows that the U.S. regulators expect to have absolute control over cryptocurrency, regardless of whether this idea can be realized. Even if there are technical means to achieve this goal, this controlled market will undoubtedly run counter to the initial wishes of cryptocurrency investors. After the decentralized products are fully controlled, the significance is greatly reduced. This is an irreconcilable contradiction. The SEC has been procrastinating and procrastinating in the application of cryptocurrency ETFs for a long time. Perhaps it is still considering how to get between the two. Find balance.
Controversy over the above two factors has become more intense in the United States recently. The new US SEC Chairman Gary Gensler was considered a friendly person in the crypto industry before taking office, but since he took over at the end of last year, he has not obviously made a more positive statement (ETF still does not pass). In recent days, Gary Gensler has taken a firmer attitude and stated that many areas of cryptocurrency may involve violations of securities laws and must be supervised by the SEC.
Looking at it this way, the U.S. cryptocurrency ETF still has a long way to go, and there is no end in sight.
As the center of the global economy, the U.S. stock exchanges have an important global reference value and status. Whether the crypto market can gain a foothold in this region is of vital importance to the entire crypto field. This is also an important reason why many companies and institutions have repeatedly failed.
For the US SEC, the large volatility and market manipulation of the crypto market are still issues that need to be resolved urgently. However, it is precisely because of the large volatility that the crypto market has attracted the attention of global investors. As a regulatory agency, the SEC is concerned with how to better protect the safety of ordinary investors. Volatility will never disappear, and market manipulation often harms the interests of investors. This is also one of the key factors that have been delayed by the SEC.
Will there be a turnaround when the US cryptocurrency EFT is approved?
Public opinion believes that this year may be the most likely year for the U.S. SEC to pass a cryptocurrency ETF. In summary, there are several reasons:
1. The new SEC chairman hinted that the approval of cryptocurrency ETFs must comply with the SEC’s strict requirements for mutual funds.
Recently, Gary Gensler hinted at a possible way for cryptocurrency ETFs to be approved. He said that ETFs that comply with the SEC’s strict regulations on mutual funds can provide investors with the necessary protection. Gensler also stated that it is open to ETFs that focus on Bitcoin futures. These Bitcoin futures are provided by CME and require investors to invest a large amount of margin for trading. Gensler said: “In view of these important protective measures, we expect staff to review such applications, especially if these applications are limited to Bitcoin futures traded on CME.”
2. The continuous influx of companies and institutions into the crypto market and the increasing number of ETF applications may put pressure on the SEC.
This year, traditional financial asset management companies and investment banks in the United States began to apply for cryptocurrency ETFs, including more than a dozen large institutions and companies such as the US asset management company Victory Capital, the asset management company Simply, and Ark Investment Management. There are more and more voices inside and outside the industry asking the SEC to pass the Bitcoin ETF.
3. The new trillion-dollar infrastructure bill in the United States is about to impose taxes on the crypto market, which provides the United States with the regulatory positioning of the market and industry, and provides the SEC with a corresponding legal basis.
Recently, U.S. Senators Toomey and Lummis stated that they have reached a bipartisan agreement on the crypto-asset tax amendment to exclude miners and key wallets from the reporting rules. In addition, U.S. Republican Senator Toomey stated that he will submit an amendment to the taxation of crypto assets soon. The encrypted asset tax amendment agreement will not involve software developers and transaction verifiers, node operators or other non-brokers. There is still some time before the implementation of the crypto asset tax amendment. Will seek to reach consensus on the crypto asset tax amendment.
The United States is about to impose taxes on the crypto market, and it has recently been “hyped”. If the bill is finally passed into law, it means that the US regulators will establish reasonable and legal supervision of the field.
The first taxation on the encryption sector means that the United States needs to recognize that the market is legal, because government agencies cannot tax an illegal market. Second, the bill provides part of the legal basis for the SEC’s review of cryptocurrency ETFs, and provides instructions on how to define a “broker”. Furthermore, an important reason for the SEC’s indefinite delay of the review is the hesitation from the top management in the United States. If the hammer falls, the SEC is expected to accept the advice from the top, and perhaps the next EFT for review is expected to pass.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/why-are-cryptocurrency-etfs-repeatedly-defeated-how-long-can-the-us-sec-hesitate-to-delay/
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