Bitcoin EFT Rejected – How will Canadian Investors be Affected?
- The U.S. Securities and Exchange Commission (SEC) has rejected 9 Bitcoin ETF applications
- Exchange Traded Funds (ETFs) were expected to attract substantial institutional investment into the cryptosphere
- SEC rejection could now lead to a Bitcoin price dip pending possible disapproval of further ETFs in September
The Latest Bitcoin ETF Decision – What do You Need to Know?
In a possible blow for Bitcoin, The U.S. Securities and Exchange Commission (SEC) has rejected approval of 9 Bitcoin ETF applications. Specifically, ETFs presented by leading investment firms ProShares, GraniteShares, and Direxion. The only question is, how will the latest Bitcoin ETF decision affect Bitcoin prices going forward?
What is a Bitcoin ETF?
To understand how the latest Bitcoin ETF decision might affect investors, it is important to understand what an ETF is.
Canada boasts one of the worlds best cryptocurrency adoption rates. In a recent survey, 58% of Canadians identified themselves as being invested in Bitcoin. However, for the most part, all such investment is consumer market-based. People on the street are invested in Bitcoin. Companies and institutional investment firms, on the other hand, are not.
Bitcoin EFT Rejection Doesn’t Really Change Anything
At present, institutional investors refrain from investing in Bitcoin, because the process is too complicated.
Investing in cryptocurrency requires the identification of a single person who can be trusted to register at an exchange, buy Bitcoin, and store coins safely. ETFs would change this. A Bitcoin ETF would be similar to a regular stock bundle. Traders would then have the option to buy, sell, and trade ETF shares, in the same way they do regular stocks.
- The only way to invest in cryptocurrency at present is to buy Bitcoin and other coins from exchanges like MyBTC.ca or Coinsquare.
- Buying Bitcoin from exchanges is too high-risk for institutional investors. (Most exchanges are unregulated. Also, if an exchange is hacked or an account validation error occurs, investors would be liable for any loss of funds)
- A Bitcoin ETF would benefit investors by allowing traders and investors to buy and sell BTC instantly via the mainstream stock market
Because Bitcoin ETFs are not already on the market, the latest Bitcoin ETF decision doesn’t change anything. However, this doesn’t make the present Bitcoin price any less volatile.
Will Bitcoin go Up or Down as a Result of the Latest SEC Decision?
By and large, Canadian investors HODL Bitcoin. However, the latest EFT news puts traders in particular, in a very challenging position.
The U.S. Securities and Exchange Commission has cited potential price manipulation, as its reason for rejecting current Bitcoin ETF applications. However, alternative ETF applications presented by VanEck and Bitwise, will not be approved or rejected by the SEC until Sept 30th.
Delaying a decision on further ETF applications until late September may see investors pump the Bitcoin price higher up to this point. However, if the SEC rejects Bitcoin EFT applications presented by Bitwise and VanEck, this could lead to a considerable decline in cryptocurrency prices.
Is Bitcoin Still a Viable Long-Term Investment?
In its recent ETF ruling, the U.S. Securities and Exchange Commission stated that:
“Disapproval does not rest on an evaluation of whether Bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”
In short, SEC rejection of Bitcoin EFTs does not diminish the real value of Bitcoin. Moreover, new ETF applications will continue to be presented by other investment firms. Institutional investors want ETFs just as much as existing cryptocurrency investors do. All that remains to be seen, is when such investors will be given an opportunity to enter the market.