In a renewed bid for ETF approval, Members of VanEck, SolidX and the Cboe BZX Exchange have once again met with the U.S. Securities and Exchange Commission (SEC) to present new arguments on why the leading cryptocurrency, Bitcoin is set for an exchange-traded fund (ETF).
This new attempt to convince the agency to approve a change of rule that will usher in the country’s first bitcoin ETF saw representatives of the three company meet with the SEC’s Division of Corporation Finance, Division of Trading and Markets, Division of Economic and Risk Analysis and Office of General Counsel.
The important thing to note about this renewed push is that it differs from previous presentations which all centered on regulatory aspects.
In their arguments, representatives of the three firms stated that the bitcoin market is ripe for ETF approval, arguing that the current market for the leading cryptocurrency is quite similar to markets for other assets which already have such products. To support their argument, they gave several examples including crude oil, silver and gold asset classes who are already enjoying the approval of the agency.
Their presentation precisely tried to compare the futures markets with the spot market. To this end, they noted that for money substitutes like gold and silver, there is a connection between the two that can be proven with empirical evidence. More so, this type of correlation “is evidence of a well-functioning capital market.
Furthermore, members from the three firms went on to remark that “Similar to commodity futures, the spot and futures prices [of bitcoin] are tightly linked,” again providing “evidence of a well-functioning capital market.”
Buttressing their points, they went on to argue that unlike other commodities which already support exchange-traded products, the bitcoin market is “less susceptible to manipulation.”
For instance, insiders who have exclusive information related to a particular commodity may trade information related to supply of such physical commodity and you’ll agree that this will impact the price. However, on the flip side, bitcoin does not face this sort of issues. The presentation added that, “The linkage between the bitcoin markets and the presence of arbitrageurs in those markets means that the manipulation of the price of bitcoin on any single venue would require manipulation of the global bitcoin price in order to be effective … Bitcoin therefore is no more susceptible to manipulation than other commodities, especially as compared to other approved ETP reference assets.”
The reality is, to manipulate the price of Bitcoin one “would require overcoming the liquidity supply of such arbitrageurs who are effectively eliminating any cross-market pricing differences,” this is especially important as arbitrageurs are most likely to have their assets stored on different exchanges to take advantage of price difference and fluctuations.
These new arguments are coming just a day after the chairman of the SEC noted that market manipulations are one of the stumbling blocks to ETF approval.