The United States Securities and Exchange Commission (SEC) has decided to delay the decision to approve a Bitcoin ETF until September 30, 2018. The SEC has been analysing whether or not to allow the first crypto-related Exchange Traded Fund, but the final decision will have to wait some more time.
The news has had profound effects on Bitcoin price and the entire cryptocurrency market; seeing prices fall 5-15% across major coins.
The SEC’s Influence on Bitcoin Price
The SEC will give the decision on a Bitcoin ETF in the next six weeks. The US regulatory agency – regarded as one of the most important regulatory bodies all over the world — will deny, approve, or again delay the decision on the ETF come September 30.
This ETF was proposed back in June 20, 2018. Later on July 2, published for comment in the Federal Register, receiving more than 1300 comments on the proposed rule change.
The VanEck SolidX Bitcoin Trust is still the most important ETF ever presented by the crypto world. Why? Because it is the first with real chances to be approved by the regulatory agency. This became especially true after last month’s denial of an ETF proposed by the Winklevoss Twins (and owners of the Gemini exchange). Still that news only saw a 3-5% drop in Bitcoin price, while today’s news seems to have a more profound effect.
The main intention has been to offer an ETF to institutional and wealthy investors rather than to the general population. The SEC is worried about the effects that virtual currencies could have on individuals without important amounts of money.
The statement released by the SEC reads as follows:
“The Commission is extending this 45-day time period. The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change. Accordingly, the Commission… designates September 30, 2018, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change.”
In general, the SEC has the power to postpone specific decisions if it considers that the proposal is controversial. What we know, from the Winklevoss ruling, is that the SEC still sees a market that is not mature and with large issues to solve before it can safely be traded as an ETF.
Bitcoin Price Movement
In the last hours, most of the virtual currencies in the market registered important loses. Bitcoin (BTC) is now being traded under $6,600 and has lost 8% in the last 24 hours. Its market capitalization is $112 billion dollars. The news dispels months of potential optimism for Bitcoin price and other coins, as investors held out that a positive ETF ruling could give a big boon in a bear market.
In the top 10 market cap coins, Ripple’s XRP registered the biggest drop falling more than 14%.
Still Reason For Optimism?
There are still some analysts who are spinning the news optimistically, however. Many are saying that the decision to delay was both expected and not a full rejection. And that, with more time to review, the SEC can analyze the true impact of an ETF, and sort through the public notice and comments that are being directed at it regarded cryptocurrencies. Perhaps the regulatory body, in an effort to not too fast, just wants more time to analyze.
As that article states:
“Secondly, with the delay, this means that the SEC is probably also considering the recent Bakkt news announcement by the Intercontinental Exchange that will provide a regulated exchange and a custody service from a reputable trading firm. This was the reason they reject the Bats ETF by the Winklevoss. There was no firm providing the two mentioned services.”
Of course, this means that Bitcoin’s price will once again see pressure build as we near toward September, likely raising up in anticipation of what would be good news and then either continuing up or bursting like we saw today.
But the idea of an ETF is not ruled out and, though its having one of its worse days in recent months, Bitcoin lives to see another day.