Many Uncertainties Still Surround the Approval of the ‘First Bitcoin ETF’ by the SEC

Should Bitcoin be a regulated digital asset or a free disruptive innovation or somehow a combination of both?

The above question has been a reoccurring topic in the cryptosphere. While many believe that Bitcoin is a regulated product and could cause no harm, others are of the opinion that it both a disruptive innovation and a regulated product. This makes it difficult for the United States Securities and Exchange Commission (U.S. SEC) to approve a Bitcoin Exchange-Traded Fund (ETF) as there are grave effects of approving a fully digital-based asset that cuts both ways.

Although this has been a disturbing topic for quite a long time, the case was recently revisited after the latest ETF rejection.

Hester Peirce, SEC Commissioner – commonly known as the CryptoMom for standing up to her fellow commissioners in August when they rejected a Bitcoin ETF – is of the school of thought that Bitcoin could be a regulated product and a disruptive innovation. But having both qualities doesn’t mean that the idea should be blown out of the water. We can only know how far the Bitcoin market can go by trying in the first place.

The Commissioner stated that she has no problem with approving a Bitcoin ETF, in fact, she would love to approve an ETF because she thinks it would give investors a better chance to fully grasp what bitcoin can and cannot do. Well, that isn’t the stand of her fellow commissioners as they are yet skeptical of the degree of ‘good’ and ‘bad’ of cryptocurrencies.

Following the latest ETF rejection, the CryptoMom has decided to force the issue, resulting in a vote for the Commission to decide if it is okay to approve a Bitcoin ETF or not. I guess that is the best option now as the issue of approving or disapproving ETF has lingered for quite a while.

Commenting on whether or not he thinks Bitcoin can be a regulated commodity or a disruptive innovation, Robert Jackson, a Democratic colleague of the CryptoMom on the Commission, asserted that he has no idea and that anyone who does is not sure but merely guessing. He stated further that on the matter at hand, he and other commissioners would likely follow the adjuration of the director of the SEC’s division of corporation finance – Bill Hinman, and the senior adviser for digital asset and innovation – Valerie Szczepanik.

When asked of his stand last month in a public appearance at Washington, Jay Clayton, the SEC chairman declined to give a comment on the possibility of the Commission approving a Bitcoin ETF. Instead, he asserted that the market speculation is yet a disturbing concern.

According to the SEC, the indecisiveness is mainly due to concerns like

  • Manipulation of the prices of cryptocurrencies
  • No clear laid down market infrastructure for cryptocurrencies and that
  • It is an entirely new type of asset

While these points are understandable, I think everything in life comes with both advantages and disadvantages. We can never realize the full potential of these digital currencies if we do not give them a try. Like any learned person would advise, I urge the Commission to weigh the pros and cons of approving a Bitcoin ETF and act accordingly.