According to Jay Clayton, the Chairman of the Securities and Exchange Commission, financiers are expecting the exchange-traded fund to provide risk-free and zero-manipulation commodity trading market, and such warranties are non-existent in the majority of the cryptomarkets. The Commission echoes the Chairman’s concern over the lack of safeguards preventing the danger of manipulation in the majority of cryptoexchanges in the worldwide market, which reduces the chance of approval for the digital currency-based exchange-traded fund.
This July, the Commission has turned down the ETF application filed by the Winklevoss twins. Back then, the SEC stated that Gemini, a strictly compliant US-based cryptoexchange, is exposed to the dangers of manipulation and highlighted that cryptoexchanges, at the time, lacked maturity to be able to manage an exchange-traded fund.
Subsequent to that ETF rejection, the position of the Commission regarding the cryptoexchanges became expressly clear. Thus, multiple organizations, such as ProShares have made numerous attempts to bypass the SEC’s decision with an introduction of exchange-traded fund based on a futures market. However, such ETFs were further rejected by the SEC as well, with the regulator finding that the futures market is too small to provide an ETF support.
In February 2019, a BTC ETF, applied for by VanEck, an investment management company based in New York with more than 47 billion dollars’ worth of assets under management, is scheduled to undergo the SEC’s evaluation. The hopes for the approval of VanEck’s ETF are high due to the fact that this time, the fund bases the value of the world’s most popular digital currency on the OTC market via an index, which has never been done before.