20.10.2021

VanEck has reapplied Bitcoin ETF approval. What does it mean?

Investment firm VanEck has resubmitted its Bitcoin ETF application to the US Securities and Exchange Commission (SEC). This happened a year after the organization withdrew its previous application.

Recall that VanEck made its last attempt to launch an ETF on BTC on September 17, 2019, and earlier the regulator had already rejected several previous proposals. SEC officials have repeatedly blocked ETF filings because they believed the cryptocurrency market was too manipulative. However, this does not stop the company.

Exchange Traded Funds, also known as ETFs, allow you to trade indices of assets in the stock market. Parts of the Bitcoin ETF will track the price of the cryptocurrency, so crypto ETFs will allow traders to trade and capitalize on the volatility of a digital asset right in the stock market.

Naturally, the launch of this product related to cryptocurrencies will have a positive impact on the reputation of the latter. If traders get the opportunity to easily communicate with blockchain assets, in the eyes of most novice investors, cryptocurrencies will cease to be a tool of scammers and speculators. This means that the demand for the asset will increase significantly, which as a result may have a positive effect on the rates.

Bitcoin ETF Prospects

Bitcoin ETFs have many advantages: investors do not need to own bitcoins and worry about the safety of coins. Cryptocurrency ETFs will also allow people to invest in Bitcoin from tax-protected accounts, which means more people will be able to access cryptocurrency and increase its popularity. Well, if you’re lucky, then the price.

The ETF reapplication coincided with the departure of SEC Chairman Jay Clayton on December 23, 2020. Recall that his term of office was supposed to last until June 2021, but his resignation ended up being early. In this regard, the representative of The Block, Larry Cermak, admitted that Bitcoin ETFs could be approved as early as 2021 – nevertheless, Clayton treated them with great caution.

Perhaps VanEck sees a chance for a compromise with the new administration of the regulator. Recall, in an interview in September 2019, Clayton said that the crypto market is not yet “ripe” for exchange-traded funds. Here is a quote from Decrypt.

How do we know we can hold and hold these cryptoassets, given that the cryptocurrency is traded on mostly unregulated exchanges? How can we be sure that these prices are not subject to significant manipulation?

That is, the main reason for the concern of the former representative of the US Securities and Exchange Commission was precisely the possible manipulations with the crypt. According to him, since operations with bitcoins are carried out, including on platforms without appropriate regulation, attackers can take advantage of this.

Quantum Economics analyst Mati Greenspan admitted in an interview with Decrypt that VanEck’s chances of approving the application have slightly improved since Clayton’s departure. Here is his point of view.

VanEck was by far the most aggressive in obtaining ETFs through the SEC, but Clayton continued to block all attempts by the company. Her leadership should try again now that Clayton is no longer in office. We very much hope that this will pass this time as well, as all of this will be especially useful during the period of institutional demand.

That is, Mati suggests that large institutional investors will appreciate the launch of the Bitcoin ETF. As we have already noted, we are talking primarily about the reputation component.

Recently, Bitcoin has become a highly coveted asset for large institutional players. The emergence of ETFs for cryptocurrency will make it more attractive and reliable in the eyes of large companies.

We believe that VanEck’s activity and persistence will sooner or later end with the launch of the Bitcoin ETF. Nevertheless, over the past year, the cryptocurrency has become much more popular among large market players, that is, they managed to study the peculiarities of the blockchain and the storage of coins. Accordingly, the niche has become much clearer for investors, which will affect the rest of the market representatives.

In addition, changes in the composition of the Securities and Exchange Commission may also be felt. As a result, the chances of approval of the initiative seem to be much higher than a few years ago.

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