Bitcoin is down 17% this week and continues to trade under pressure as the most liquid crypto currency dropped below $3,500. The entire crypto market feels heavy and news on Thursday that the Securities and Exchange Commission plans to postpone a decision on a bitcoin ETF has further eroded confidence.
The SEC Updates Ruling on a Bitcoin ETF
On December 6, 2018 the US Securities and Exchange Commission posted a note describing where the government agency was with regard to the approval of a bitcoin ETF. So far this year, there has been several fits and starts which has weighed on bitcoin prices. An exchange traded fund is a security that holds other assets, and trades like a stock allowing retail investors access different markets. For example, there are ETFs on indices like the Nasdaq, sectors like the financial space, and commodities like oil. You can see a plethora of different ETFs and follow breaking information with Vestle news and analysis.
The ETF that the SEC was addressing is the VanEck SolidX Bitcoin Trust. VanEck is one of the largest producers of ETFs in the United States. This ETF was created by a blockchain company called SolidX. Surprisingly, VanEck has attempted 3-times to get a bitcoin ETF approved by the SEC. In the update, the SEC said it was delaying its decision until Feb. 29, 2019. The commission stated that it is appropriate to extend the decision period for approval, so the SEC has enough time to consider the proposed rule change. Since this is the 3rd time the SEC has evaluated a bitcoin ETF, its important to look at what happened in the prior periods. The last time the value of bitcoin dropped a whopping 9-billion in value.
US Congress Plans to Introduce New Crypto Currency Regulations
US lawmakers plan to introduce new regulations with the intention of protecting consumers. Congress plans to introduce two bills to prevent fraud. The bills have the backing of both Democrats and Republicans but does not lay out specifics on how to reach these goals. The first bill asks another government agency, the Commodity Futures Trading Commission (CFTC), to come up with specific recommendations. This is a good sign as it represents a maturing of the bitcoin market. While crypto currency markets have been around for more than a decade, the recent surge in prices and recent decline has attracted a lot of investors. One of the main issues is that initial coin offerings turn out to be fraudulent.
In the US, the oversight of the crypto currency market is split. The CFTC oversees bitcoin and ether and the SEC has regulatory oversight for all other coins. The SEC has been vigilant on fraud and any new coin that has failed to register with the agency.
The second bill is called “The U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018”. It is geared to make sure the US stays ahead of the curve in the crypto industry. The bill asks the CFTC to do a comparative study of crypto regulation both domestically and internationally and then make recommendations for U.S. regulatory controls.