No matter how many problems with Bitcoin, why will SEC eventually approve Bitcoin ETF?
What is the reason why SEC does not approve Bitcoin ETF? Is it because of market manipulation, money laundering or something? The author believes that the fundamental reason is Bitcoin itself, Bitcoin does not have a mature basis for market transparency, there is no central issuer, and so on. But the author believes that in the end, these reasons will be overcome and ETF will eventually be approved.
Original title: "Why the SEC Will Approve a Bitcoin ETF" original author: Mark Helfman Translation: blue Fox Note Community LuOriginal title: "Why the SEC Will Approve a Bitcoin ETF"Original author: Mark HelfmanTranslation: blue fox note-taking community Lu
Hester Pierce and Robert J Jackson, Jr, two of the top US financial regulators and (SEC) commissioners of the Securities and Exchange Commission, said they wanted SEC to approve Bitcoin ETF. Jay Clayton, chairman of the SEC, has said he believes bitcoin "is similar to the dollar, yen, euro-Bitcoin operates in the same way as a currency." "
SEC has approved ETF for dollars, yen and euros. And SEC has approved ETF for a variety of other commodities-such as copper, uranium, wheat, cotton, collateralised debt obligations, etc.-and the list is being updated. It looks as if SEC has approved the ETF, for everything and now it wants Bitcoin ETF.
But SEC rejected all bitcoin ETF proposals. Why is that?
Analysts and commentators have analyzed many reasons. Let's take a look at these reasons first. At the end of this article, I'll tell you why SEC will eventually approve Bitcoin ETF.
They analyzed the reasons for SEC's current rejection of ETF:
Bitcoin is likely to be manipulated by anonymous forces. People who hold large amounts of bitcoin can control the price at will. 1% of Bitcoin wallet addresses hold 87% of the world's Bitcoin (although many of these wallets belong to cryptocurrency exchanges). The Justice Department believes that the founder of USDT, a stable currency pegged to the dollar, manipulated the entire market in 2017, although scientific researchers thought it was nonsense.
Market manipulation is an area of concern for SEC, but it is by no means a reason to reject Bitcoin ETF. ETF, oil is the most typical example of a large number of manipulated commodities. In addition to oil, there are many other commodities, some of which you never even thought of, such as uranium and tungsten. The price of uranium is set by two companies; nearly 90% of the world's tungsten supply is controlled by China. )
SEC knows this, and if SEC is worried about Bitcoin manipulation, it can require Bitcoin ETF to disclose, publicize or take other action to ensure that investors are aware of the risks.
This is pointless. SEC takes its work seriously and sets high standards for new products. In the two years after SEC rejected the first copper ETF, the copper ETF proposal was revised five times before it was approved by SEC. Similar examples have been numerous over the years.
This is true, but the SEC and all financial regulators in the United States make the same assumptions about all financial assets, currencies and commodities. Is it possible for diamonds to be used? Is oil possible?
Do you know what the most common financial assets are dictators and drug gangs?
While it is easier to carry bitcoin than dollars, it is also easier for US authorities to track bitcoin. In fact, federal investigators use bitcoin trading to identify Russian money laundering that undermines the 2016 U. S. presidential election. The tracking of the dollar is nowhere to be found.
Suppose North Korea, Russia and all other governments hold bitcoin, even if they may not necessarily do so. But we can also assume that the government holds gold, real estate, aluminum and almost everything. For this reason, the reason for rejecting Bitcoin ETF is also untenable.
I don't know who would believe that. Some ETF proposals come from unknown companies, but most come from legitimate investment companies with competitive, professional management.
Gemini Trust, the New York Stock Exchange and the Chicago Board options Exchange are global, profitable and highly connected financial companies. Each of their companies operates in compliance and effectively. They all supported some ETF proposals. But the proposals were not approved.
Other ETF proposals come from little-known companies, but I think they are also capable. Applying for ETF requires the company to have the corresponding legal background and management ability. When SEC receives an application that does not meet its criteria, the application is rejected. Applications of poor quality will also enter the approval / rejection stage.
Why didn't SEC approve Bitcoin ETF??
If the crux of the problem is not oligarchy, money laundering, USDT, financial companies or manipulation. So what prevents Bitcoin ETF from getting SEC approval?
SEC says each proposal has its own problems. For example, price-setting mechanisms are unreasonable, there are no safeguards against manipulation or theft, and other technical problems.
Maybe. But I think there is a more fundamental reason to make it difficult for various bitcoin ETF to meet the requirements of SEC.
The reason is bitcoin itself.
Other ETF, have information exchange centers, mature markets, well-known companies and so on to assess market dynamics. And there is usually a lot of historical and market data to analyze, coupled with open markets and derivatives, you can use them to get "spot prices", which are accepted prices that reflect the global price of goods at some point. This allows SEC and investors to understand the market.
And Bitcoin, you don't get these terms. Some are just a bunch of small exchanges (many of which are not regulated), there are no central issuers, and there is no authoritative body responsible for any trading. There was a time when the price of bitcoin in Iran was 600% higher than in the United States, and at the same time, the price difference between different exchanges could be as high as 10%. The government has no control over bitcoin.
Transactions are anonymous, peer-to-peer, and settled immediately-there is no written material, so unless you have forensic technology, you can't track the transfer path of bitcoin in the market. Anyone can send and receive bitcoin on their mobile phone. The trading process is mobile, decentralized and private.
This is not a loophole in Bitcoin, but a feature of it. But this is a real concern for regulators, whose job is to ensure that all investors have fair and equal access to market information. At least for uranium, you know that Cameco or Kazatomprom (or both) are manipulating prices. All investors can see it. This is a level playing field. Investors know what they are doing, and SEC has enough information to monitor, enforce rules, and provide advice.
Bitcoin does not have this mechanism in nature and may never have it in the future, and it is not designed to have these functions. A bunch of decentralized exchanges, with different prices and styles, without a central issuer. So Bitcoin ETF is in a dilemma.
Don't just believe my side of the story, listen to SEC: before approving the Bitcoin ETF, the SEC commissioner Clayton needs to see an upgrade and shift in the encrypted money market.
But all that will change. Google has developed services to help investors and regulators monitor the encrypted money market, while Gemini has improved its market monitoring mechanism. Nasdaq is also said to have created a team of market regulators (although this is a rumor, there have been no news reports). Assuming that other organizations are taking similar action, it should effectively allay regulators' concerns about the lack of transparency in encrypted money markets. In addition, SEC may request that, as a condition of approval, ETF providers are required to disclose certain data or perform certain oversight.
At the same time, financial professionals continue to build a sound bitcoin market in a transparent and orderly manner. They are filing a case for Bitcoin ETF, which they believe will eventually succeed. Rich people and politicians want the Bitcoin ETF to be approved, and a number of trusted companies have laid the groundwork for approval.
The road to approval of the Bitcoin ETF took longer than we thought. Bitcoin ETF is just one of the many problems facing SEC (see SEC recommendation rules, orders / notifications, and enforcement bills). This is not a big deal compared with the trillions of dollars of other types of investments that SEC handles, and Bitcoin is unlikely to cause serious systemic problems in the U. S. investment industry. SEC goes all out to effectively regulate ICO and protect ICO investors because ICO has a greater impact on cryptocurrencies and financial markets as a whole. SEC is also considering whether Bitcoin is suitable for traditional financial products such as ETF.
I used to work in the United States Congress, and now I work in a government agency. I know politics and bureaucracy. Everything takes time. The solution of any problem needs to deal with the contradiction between people, rules, law and timeline. It is no exaggeration to say that even if all goes well, your plan may be killed.
At the same time, SEC seems to be a little easier in dealing with the problem. It exists to protect you, not to decide what you can invest in. Although they may not seem to be protecting you, they are really protecting you.
At the very least, they are working in this direction.
Source link: medium.com
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