Feb. 17, 2019
Dear Sir/Madam, My question is a simple one- why the rush by the SEC to approve a Bitcoin ETF/ETP? The only advantage seems to be to the major institutions who could work collectively to influence the ecosystem. Even if an ETF were to be approved, bitcoin advocates question how this structure – in which a fund owns underlying assets and divides ownership of them into shares – would address the idiosyncrasies of cryptocurrency. For example, what if there’s another fork of the network, like the one that created bitcoin cash last year? Do the custodians give the coins back to people or do they suddenly become an index fund? Bitcoin rehypothecation is also a concern (due to its finite supply). At the moment an ETF/ETP looks like it will solely benefit large organisations and possibly have unintended consequences to the ecosystem if unleashed too quickly. However, I am not saying that a Bitcoin ETF/ETP is a negative thing under SEC oversight. It will pave the road for effective regulation, taxation and after the initial price appreciation upon the launch of the ETF/ETP due to the speculator euphoria (not institutional input as everyone expects) we can expect a regression to the mean, excellent stability and genuine price discovery of the product. Furthermore, any illegal activities can be curtailed due to the nature of this currency (and its offspring) due to proper legal oversight. So the real question that needs answering is granting a Bitcoin ETF/ETP this early on after a bubble is a question that only you can address. In the interest of full disclosure, I actively participate in the cryptocurrency markets. My opinion is it that it is essential that an ETF/ETP be eventually granted. But not this early on. Best Regards, Samantha Puddifoot