The cryptocurrency space has waited long and patiently for the U.S Securities and Exchange Commission to approve a bitcoin exchange-traded fund (ETF).
It has not happened so far, with the securities watchdog already rejected bitcoin ETF applications on various grounds. The SEC recently rejected a batch of nine applications and before that, the regulator had declined another request by the Winklevoss twins- owners of U.S crypto exchange Gemini.
However, proponents of the digital asset-backed product say that the launch of a bitcoin ETF in the market will serve as a catalyst that would see the crypto industry benefit from an influx of new investments worth billions of dollars.
The same assertion is held by VanEck, one of the firms seeking SEC’s green light to launch an exchange-traded fund.
According to Gabor Gurbacs, VanEck’s head of Digital Assets Strategy, the possibility of having so much money poured into crypto-related products is an opportunity the SEC needs to grab by approving those proposals before it.
He added that it would offer the regulator the chance to bring regulatory compliance to the burgeoning cryptocurrency market.
Gurbacs made his comments in a CNBC Africa interview on the program Crypto Trader. Notably, his assertions come at a time when the SEC is expected to give its decision on VanEck’s ETF proposal on December 29, 2018. The SEC has the right to push this deadline one final time to February 27, 2019.
The firm has maintained that it has addressed the regulator’s concerns regarding the potential for the crypto market to suffer price manipulations among other things, calling for the government agency’s speedy determination on their request.
Although SEC appears unconvinced that the crypto market is ready for an ETF, VanEck’s persistence and the support offered by some commissioners could see the U.S securities market regulator take a favorable view.
VanEck has been touted as the top offering among many of the firms that want the SEC’s approval to their rule change proposals.
Others with proposals before the regulator are ProShares, Direxion, and GraniteShores, all of which wish to launch their bitcoin ETFs within a regulatory framework.
What VanEck thinks about its pending application
According to Gurbacs, what VanEck has set out is a bitcoin product that has been carefully tailored to protect the investor against potential market pitfalls, all the while ensuring that they maintain a product that retains the appeal of cryptocurrency trading.
He added that the VanEck product is set apart from other products as it is “a physical bitcoin ETF.”
According to him, their exchange-traded fund is a “fully insured” offering that will give safeguards against unforeseen eventualities like thefts, hackings, and other forms of coin losses. None of these should worry an investor, because every one of the bitcoins will be insured.
“It’s fully insured so if there is any theft, hacks or losses; then the insurance covers it.”
Additionally, Gurbacs said that they have the mechanisms to protect prospective investors who may be concerned about potential price pump schemes and similar manipulation.
He intimated that VanEck’s bitcoin pricing is provided by their indexing subsidiary, which has regulatory approval and “provided the first financial standard and regulated indices.”
Further to that, the firm’s Bitcoin ETF will be launched as an institutional-oriented product, with every share representing ownership of 25 Bitcoins.
Gurbacs likened the potential performance of a bitcoin ETF to that of traditional gold exchange-traded funds. He predicts that the crypto could see interest peak at highs of over $1 billion on the first day and even reach tens of billions similary to gold ETFs.
He compared what they have in their gold-related products and what bitcoin ETFs could do and said that:
“Our gold ETFs are already in a few billion dollars range. There are gold ETFs in $10 billion range as well. I wouldn’t be surprised if a bitcoin ETF gets in a few billion dollars range.”
The influx of big money will primarily be driven by institutional investors that find it riskier to invest in the crypto spot markets. This group of investors will fancy ETFs as being safer and less risky compared to the spot market.
Crypto, as it appears, could benefit big time from SEC’s approval of one of the ETF proposals before it.