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ETF: Why is the crypto market falling again and when will it recover?

  • Winklevoss brother’s proposal for ETF was rejected again 
  • The Securities and Exchange Commission (SEC) has delayed their decision on CBOE, VanEck and SolidX proposal 
  • The market now heavily anticipates the SEC decision scheduled on the 30th of September 

Rejection is something that even the cryptocurrency market takes to heart, and as of recent times it is mass rejection that is causing the price fall. 

For those who have been following the cryptocurrency market, you would be aware of what the ETF is and its significance. For more passive cryptocurrency investors, here is a quick summary of the ETF and its importance. 

What is the ETF and what does it mean? 

ETF stands for an Exchange Traded Fund. It is similar to the likes of the ASX (200) or the American NASDAQ(100), which are index’s based on the top company’s in the exchange. The overriding benefit of having an ETF is it creates a diversified representation of a broader market. This allows investors to, “spread their eggs” without having to purchase multiple stocks. 

How does the ETF relate to Bitcoin? 

In March 2017 the Winklevoss twins took a proposal to the US Securities and Exchange Commission (SEC), to list the first-ever cryptocurrency ETF on a regulated exchange. Due to Bitcoin being so new and under established, the SEC understandably rejected the proposal saying, “It poses to much risk to the overall market at this stage.” 

Since March 2017 the cryptocurrency market has seen a substantial amount of reform and regulation, and as a result the Winklevoss twins took another proposal to the SEC. Unfortunately, this proposal was also rejected, however the SEC was notably more positive with their feedback.  

The SEC further emphasized that their rejection of the petition did not hinge on whether cryptocurrencies or blockchain technology “[have] utility or value as an innovation or an investment.” The Commission continued: 

“Rather, the Commission is disapproving this proposed rule change because… BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act… in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.” 

So, what comes next for the ETF approval? 

Despite the Winklevoss twin’s proposal being rejected, the market now looks forward to the next proposal for an ETF. 

This proposal is being orchestrated by major firms CBOE, VanEck and SolidX. The decision was set to be made by the SEC on August the 16th 2018, however today the decision has been delayed until the 30th of September. This is why the market has had a substantial pull back today. 

The approval of an ETF will be the next step to further establishing the cryptocurrency market and could lead to welcoming arms of institutional investors. As a result, the market will be heavily anticipating the SEC decision coming up on September the 30th.  

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