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Bitcoin ETF Rejection – Does Bitcoin Have a Future?

Bitcoin ETF Rejection – Does Bitcoin Have a Future?

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The SEC denied the Winklevoss Twins bid for launching Bitcoin ETF.  This came about as a shock to the investment world.  There is no doubt that much anticipation has been placed on the Bitcoin ETF launch.   There is a growing interest in this digital currency.  However, whilst a few days ago Bitcoin was trumping Gold, we now discuss the future of Bitcoin after the ETF Rejection.

Bitcoin ETF Rejection Sends Bitcoin Price Tumbling

 

The future dreams of investor Winklevoss Twins were certainly dampened with the SEC decision on Friday 10th to deny launch of Bitcoin ETF (Exchange Traded Fund).  The government regulators denied and declined the request by investors Tyler and Cameron Winklevoss.  This is a second big blow to the enthusiastic entrepreneurs who previously suffered a law-suit loss over FaceBook ownership with Zuckerberg.

Speculators waiting in anticipation of the Bitcoin ETF launch, were also in shock and suffering losses when the news prompted a big bitcoin sell-off.  The price of Bitcoin fell drastically to $1060 from the heady highs of $1300 just a few hours earlier.

 Bitcoin ETF rejection

SEC Reasons for Bitcoin ETF Rejection

The SEC issue a STATEMENT stating

The commission is rejecting this proposal because it is inconsistent with Section 6(b)(5) of the Exchange Act

This section of the Exchange Act is designed to prevent fraud and manipulation.  It is intended to protect investors and the public in general.

Although this sounds shocking, the Exchange Commission further explained that in order to get approval, a Bitcoin ETF would require

surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives of that commodity

More importantly, the SEC insisted that the markets trading Bitcoin have to be regulated.  There were no further comments beyond the Statement.

The Winklevoss Response to the Bitcoin ETF Rejection

Bitcoin ETF rejection
Winklevoss Twins – Image Courtesy of CNBC

In an email statement, Tyler Winklevoss, the chief financial officer of Digital Asset Services claimed that his company remains optimistic to bring Bitcoin to the market.  They are planning to continue working closely with the SEC staff.  This is, after all, a four-year journey. This Bitcoin ETF rejection will not stop the company not seeing the ETF go through next time.  On a very positive note, Tyler Winklevoss made it clear that his Company agrees with SEC that regulation and oversight are priorities for the safety of all investors.

Market Reactions on Bitcoin ETF Rejection

The cryptocurrency has already bounced back to $1100 in the ensuing days.  Although the initial drop was 10%, the price has already recovered by 3% since.

The reasoning behind the general positivity stems from the fact that the SEC Bitcoin ETF Rejection will not affect the price too negatively.  After all, Bitcoin did not have an ETF for the first 8 years of its life.  Therefore, despite the denial, the growth of the cryptocurrency is not expected to be dampened.

There is no question that this decision was a disappointment to the Winklevoss twins who have already traveled four years down the road to be the first creators of the Bitcoin ETF.  However, the currency is innovative and there is no denying its advantages.

Bitcoin was created by a mysterious mathematical genius thought to be Japanese eight years ago.  The cryptocurrency can be mined by solving complicated mathematical puzzles and formulas.  Whilst it was relatively easy to “mine” Bitcoin for the first couple of years, today, it is probably more expensive to “mine” Bitcoin than to buy it in the open market.

What Are the Advantages of Bitcoin?

Bitcoin has made a complete breakthrough in the way by which money can be sent via the internet. Bitcoin can be transferred anywhere in the world in a quick and cheap manner.

The recipient of the Bitcoin cryptocurrency can, in turn, pay anyone else in the same manner.  The ease and flexibility by which Bitcoin can be transferred anywhere without the need of banks are what led it to become an attraction to online drug market.

Those days are over, and today more and more banks are “vaulting” the currency.  It seems to follow that the future of the Bitcoin as a legit digital currency looks nice and bright.

This is not to say, that the security concerns surrounding Bitcoin are not validated.  It also means, however, that there are options. The Winklevoss Twins have now a more concrete reason for which to continue pushing for an ETF.  Creating security, regulation and insurance are the areas which will now have to be targeted.  It is a question of how long.  It is not a question of whether it will happen.

The SEC later posted a very encouraging online statement

The Commission notes that bitcoin is still in the relatively early stages of its development. Over time, regulated bitcoin-related markets of significant size may develop

 bitcoinbot

 

Today’s Bitcoin Can Be Tomorrow’s Digital Gold

No one can predict the future. However, it seems that the technology companies that provide the block chain services could be heading to a bright evolvement. There are two more Bitcoin ETF applications in the pipeline and awaiting the verdict from the SEC.  These include the Grayscale Investments LLC’s Bitcoin Investment trust and SolidX Partners Inc.

Despite the fact that the recent Bitcoin ETF application by Digital Assets Services of the Winklevoss Twins was rejected, it appears that the general direction is still heading to a regulated bitcoin market.

There may be no time better than now to look at the potential of earning with Bitcoin.  The recent Bitcoin ETF Rejection can only pave the way for more security and regulation.  This can lead to the eventual open market for the crypto-currency. Today’s image of Bitcoin is much improved from the shady days of drug-dealing.  Many investors have bought into Bitcoin believing this to be the digital gold of the future.  In countries where Banks cannot be trusted and the credit card systems are not developed, Bitcoin has become the answer to money transfers for regular online purchases.  Transfers can be made simply via smartphones.

Today smart retailers in developed countries like Dell, Expedia, and Overstock are accepting payment by Bitcoin.  Furthermore, countries that have politic instability such as Brazil, Venezuela, and Greece have resorted to Bitcoin time and again in times of crisis.

etoro bitcoin

Bitcoin ETF Rejection – What is the Future of Bitcoin?

The advantages of a Bitcoin ETF are primarily that Bitcoin would be SEC regulated.  This opens up a market for trading and investing Bitcoin without needing to hold the currency.  Bitcoin would become more accessible.  Naturally, if the SEC had approved the ETF, Bitcoin would have made leaps and bounds in regulating Bitcoin worldwide.

Had Bitcoin ETF not been rejected, we may have seen a price increase to unprecedented heights.  When gold ETF’s were introduced in the mid-2000s the price of gold tripled in five years. It is not far-fetched to have expected the same kind of price rise from the growing demand.

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