SEC Embarks Upon Decision That Will Drastically Impact Cryptocurrency As We Know It

The U.S. Securities and Exchange Commission (SEC) is currently embarking upon a decision-making process that will drastically impact cryptocurrency as we know it. Within the next two months, the SEC will either approve or disprove more than 10 proposed bitcoin ETFs. Should they be approved, these crypto ETFs will be the first of their kind. We predict the proposed changes will generate a drastic increase in the adoption of cryptocurrency. With this said, the next two months will be of the utmost significance for bitcoin and cryptocurrency as a whole.

What Are ETFs?

An ETF (exchange-traded fund) will allow much greater access and far more ease of use to crypto for everyone from the general public to large investors. Buying into an ETF means you hold documentation (virtual or physical) which represents your asset(s). This financial product is used to track the price of an asset and allows investors to avoid the purchasing of the asset itself. Comparatively, the market for gold skyrocketed when gold ETFs were introduced. Individuals no longer had to store their gold in their homes or pay a third-party for secure keeping. Funny enough now, bitcoin transaction volume is higher than gold. 

Crypto ETFs will allow individuals to buy, store, and trade cryptocurrency easily without having to worry about the logistics or security involved. Therefore, the introduction of crypto ETFs will be far safer than purchasing bitcoin through a crypto-asset exchange.

The Proposed ETFs

Below is a list of the 10 bitcoin ETF filings which are under consideration. SEC decision deadlines are set 45 days after proposals are filed in the U.S. Federal Register. Though, the SEC holds the authority to punt their decision up to 240 days after the Register publication. Here are the potential ETFs:

1. The SolidX-VanEck Bitcoin Trust

Date Filed: 06/05/18
SEC Decision Deadline: September 30th, 2018
Proposed ETF Ticker: XBTC
Exchange: CBOE BZX
ETF Purpose: A physically-backed bitcoin ETF insured against loss or theft of bitcoin.

This filing was submitted on June 5th. Though, as of August 7th, the SEC has punted their decision on the SolidX-VanEck proposal to September 30th. The SolidX-VanEck Bitcoin Trust is the only “physical” ETF of the proposals. VanEck is an investment firm who teamed up with Solid X, a financial service company to create an ETC under the name “VanEck SolidX Bitcoin Trust.” VanEck has had two proposals rejected by the SEC in the past. The two NYC-based companies designed the VanEck SolidX Bitcoin Trust for institutional investors with a $200,000 price-per-share. The companies plan to ensure their ETC against theft, corruption, and loss of access.

2. ProShares Bitcoin ETF

Date Filed: 12/19/17
SEC Decision Deadline: August 23rd, 2018
Proposed ETF Ticker: N/A
Exchange: NYSE
ETF Purpose: Results for this ETF will be in correspondence with the performance of lead month bitcoin futures contracts. The objective of this trust is for the shares to correspond to the performance of the price of bitcoin.

ProShares’ bitcoin ETF was filed on December 19th and is predicted to have a decision by August 23rd. ProShares is one of the world’s leading sellers for ETFs. They currently have about $29 billion in assets under their management. Though, ProShares is a small asset provider, they offer unique ETF which work to track different asset classes. The two funds proposed by ProShares intend to track bitcoin futures contracts that are traded on the Chicago Board of Options Exchange or the Chicago Mercantile Exchange. According to ProShare’s filing, these ETFs will trade on NYSE Arca.

3. ProShares Short Bitcoin ETF

Date Filed: 12/19/17
SEC Decision Deadline: August 23rd, 2018
Proposed ETF Ticker: N/A
Exchange: NYSE
ETF Purpose: Provide investment results that correspond inversely to the performance of the Benchmark Futures Contract daily.

ProShares’ short bitcoin ETF filing was also made on December 19th with the same decision date of August 23rd. ProShares offers three categories of ETFs: short, ultra, and alpha. Their short ProShares are unique because they behave inversely to the market. An inverse ETF profits from a decline in value to profit from falling prices through various investment strategies.

4. GraniteShares Bitcoin ETF

Date Filed: 12/15/17
SEC Decision Deadline: September 30th, 2018
Proposed ETF Ticker: N/A
Exchange: CBOE BZX
ETF Purpose: Also known as “The Matching Fund,” it seeks results (before fees and expenses) that match the performance of front-month bitcoin futures contracts both daily and over time.

GraniteShares put forth a filing for two crypto ETFs on December 15th which are expected to receive verdicts by September 15th, 2018. GraniteShares is a key player in the investment industry since it was founded in 2016 by Will Rhind. Rhind wished to address a gap in the market for ETFs and strived to satisfy investors. Later that year, GrainteShares went on to partner with Bain Capital Ventures and other investors to raise an exceptional amount of capital. In December of 2017 GrantineShares acquired HIPS and launched a platinum ETF the following month. They have received a great deal of media attention for things such as surpassing $300 million in assets under management. To add to their appeal, in March of 2018 GraniteShares won New ETF Issuer on the Year from ETF.com.

5. GraniteShares Short Bitcoin ETF

Date Filed: 12/15/17
SEC Decision Deadline: September 30th, 2018
Proposed ETF Ticker: N/A
Exchange: CBOE BZX
ETF Purpose: This inverse fund seeks to provide investment results that correspond daily to the inverse performance of the Benchmark for a single day.

Submitted on December 15th and to be decided upon September 15th, GraniteShares Short Bitcoin ETF is the second of their proposed ETFs under consideration. GraniteShares is eagerly awaiting the decision regarding their proposed bitcoin ETFs mid-September.

6. Direxion Daily Bitcoin Bear 1X Shares

Date Filed: 01/04/18
SEC Decision Deadline: September 21st, 2018
Proposed ETF Ticker: N/A
Exchange: CME, CBOE
ETF Purpose: This ETF will seek inverse investment results daily that are -100% of the daily return of the target benchmark.

Direction Asset Management has submitted a request to introduce five bitcoin ETFs. The five funds were proposed to the SEC on January 4th and are said to expect a decision by September 21st, 2018. Founded in 1997, Direxion has about $14.4 billion in assets under management as of June 30, 2018. Direxion Asset Management specializes in leveraged and inverse ETFs. The Direxion Daily Bitcoin Bear 1X Shares fund is for the purpose of direct correlation with bitcoin. It will operate as a short fund, capitalizing on declines in price. Rather than being directly tied to the price of bitcoin, these funds will react to the futures price traded on the Cboe and CME.

7. Direxion Daily Bitcoin 1.25X Bull Shares

Date Filed: 01/04/18
SEC Decision Deadline: September 21st, 2018
Proposed ETF Ticker: N/A
Exchange: CME, CBOE
ETF Purpose: Seeks investment results daily which are 125% of the daily return of the target benchmark.

Proposed on January 4th and set to receive an answer from the SEC by September 21st, 2018. Apart from the Direxion Daily Bitcoin Bear 1X Shares fund, the other funds amplify the price of bitcoin using derivatives. These types of ETFs are called leveraged funds. This fund mimics the daily price fluctuations of bitcoin by 1.25 times.

8. Direxion Daily Bitcoin 1.5X Bull Shares

Date Filed: 01/04/18
SEC Decision Deadline: September 21st, 2018
Proposed ETF Ticker: N/A
Exchange: CME, CBOE
ETF Purpose: Seeks investment results daily which are 150% of the daily return of the target benchmark.

Proposed on January 4th and set to receive an answer from the SEC by September 21st, 2018. This fund mimics the daily price fluctuations of bitcoin by 1.5 times.

9. Direxion Daily Bitcoin 2X Bull Shares

Date Filed: 01/04/18
SEC Decision Deadline: September 21st, 2018
Proposed ETF Ticker: N/Ax
Exchange: CME, CBOE
ETF Purpose: Seeks investment results daily which are 200% of the daily return of the target benchmark.

Proposed on January 4th and set to receive an answer from the SEC by September 21st, 2018. This fund mimics the daily price fluctuations of bitcoin by 2 times.

10. Direxion Daily Bitcoin 2X Bear Shares

Date Filed: 01/04/18
SEC Decision Deadline: September 21st, 2018
Proposed ETF Ticker: N/A
Exchange: CME, CBOE
ETF Purpose: This ETF will seek inverse investment results daily that is -200% of the daily return of the target benchmark.

Proposed on January 4th and set to receive an answer from the SEC by September 21st, 2018. This bear fund operates as a short fund, profiting from declines in bitcoin.

The Crypto-Adoption Revolution?

No innovation can make radical change without wide-spread adoption. Therefore, crypto ETFs hold the potential to wildly impact the adoption rates of bitcoin, cryptocurrency, and blockchain. Even now, World Bank announced that it will be offering the first public blockchain bond ever. These developments can allow access to those who are lacking information or confidence within the crypto sphere. Similarly, the proposed changes can provide added safety and security for large-scale investors. As a matter of fact, the upcoming decisions by the SEC will have a profound impact on crypto communities and the world of finance as a whole.

Though the deadlines are rapidly approaching, the SEC may opt to punt the decisions again. However, there is always a chance that they may release decisions ahead of the set deadlines. To learn more, follow along with us as the story unfolds.

As an update, the SEC rejected 9 bitcoin ETFs, but not this last one.