What is Bitcoin ETF? Why is Bitcoin ETF so difficult to pass?

Since Winklevoss and Cameron proposed Bitcoin ETF to the SEC in 2013, countless organizations submitted an application to the SEC throughout these 8 years, but without exception, they were either directly rejected or postponed. As a result, everyone has doubts on whether there is still a possibility for approval?

Although Bitcoin ETFs are frequently rejected by the SEC, there have been successful applications in other regions. For example, on February 18, Canada's first Bitcoin ETF was officially listed on the Toronto Stock Exchange(TSX). Then on June 24, the Brazilian Stock Exchange launched the first Bitcoin ETF in Latin America, and on July 14, the Securities and Exchange Commission of Brazil(CVM) approved the first Ether ETF and will be listed on the Brazilian Stock Exchange B3, which is also the first Ethereum ETF in Latin America. Since then, more organizations have moved towards applying for Bitcoin ETF and Ethereum ETF, such as VanEck, Coinshares, 3iQ, ARK funds, etc., but without exception, the US SEC has not approved any application for Bitcoin ETF.

So, what is a Bitcoin ETF?

In short, Bitcoin ETF provides a legal and simple way to trade Bitcoin and trade in the traditional Stock market. The significance of this is that it lowers the entry threshold of Bitcoin. In the past, the complicated procedures of exchanges shut out most outsiders. The successful approval of the Bitcoin ETF means that many users in the traditional Stock market are likely to come across Bitcoin through ETF. In addition, Bitcoin ETF is a layer of legal identity. If the Bitcoin ETF can be approved by the SEC, it means that it provides a certain degree of regulatory recognition to a certain extent.

Then why does the SEC not approve the Bitcoin ETF?

The SEC supervises and manages the massive market scale, and the supervision of cryptocurrencies such as Bitcoin is not clear in various countries, making the SEC extra cautious in the review process. Second, Bitcoin is still heavily controlled, and the price is often controlled in the short term through the combination of spot and futures. Moreover, the price volatility is very high, and the side effects on the victim increase with it. Perhaps, only when Bitcoin is no longer so easily manipulated will the SEC have the possibility of approving a Bitcoin ETF.

Furthermore, the liquidity of Bitcoin is insufficient. Its volume reached a trillion U.S. dollar market value this year. A magnate's purchase or even just words can affect the direction of Bitcoin, showing that Bitcoin's liquidity is insufficient. In a big market, the remarks of a minority of people are pointless. Perhaps as Bitcoin continues to grow in the future, the SEC will approve the Bitcoin ETF one day, but this day may not come so soon.

Written by: 41Financial