U.S. regulatory clarity should support new Bitcoin ETF application

In the US, another application for a Bitcoin ETF was filed by CBOE Global Markets after earlier applications were rejected by other companies because the crypto market is still “unregulated”. Now that the SEC has announced that Bitcoin and Ethereum are not regulated as securities, it is more likely that the applications will go through.

Bitcoin ETFs are just around the corner

In the US, CBOE Global Markets, which already trades Bitcoin futures, is the youngest company to apply for an ETF license. On 26 June, the SEC issued a statement requesting its opinion. The ETF will trade only SolidX Bitcoin shares and one share is equivalent to 25 Bitcoin. If the application goes through, trading will start in the first quarter of 2019.

The SEC has already received two applications from the VanEck SolidX Bitcoin Trust and in March 2017 rejected an application from the Winklevoss Twins for a Bitcoin ETF. The application was rejected on the grounds that the crypto market is not regulated. Back then, the SEC said in a statement

“The Commission considers that the important markets for Bitcoin are not regulated. The Commission therefore considers the proposed change to the rules to be incompatible with the Stock Exchange Act.”

While there is still confusion in the US about which authorities regulate the crypto market, the SEC has clarified that Bitcoin and Ethereum are not securities. Following this decision and the appointment of a new crypto-chief, the crypto market in the USA is more clearly defined. However, the regulatory status of the ICOs is still unclear, as the SEC has not changed its view that they are securities, at least initially.

Since a Bitcoin ETF cannot trade other crypto assets, it does not have to deal in unregistered securities. This means that it is quite possible that the new Bitcoin ETF applications could go through and, above all, will appeal to traditional investors.

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Other countries lead crypto regulation

The US is rapidly falling behind countries like Malta, which on 5 July announced three new laws to regulate the crypto market and promote business. Other countries, such as Gibraltar, have also shown that they accept these new markets and have recognized the value that crypto companies will bring in terms of jobs.

It was also announced on 5 July that Europe’s largest high frequency trader of exchange traded funds (ETFs) will enter the crypto markets and possibly launch the first European bitcoin ETF. With such high-profile steps, it appears that the SEC will be under great pressure to allow the US to compete with the rest of the world.