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SEC Stymies Plans to Offer Bitcoin Funds Anytime

[tm_heading tag=”h5″ custom_google_font=”” font_weight=”600″ text=”The Securities and Exchange Commission (SEC) yesterday put the kibosh on plans to offer exchange-traded funds (ETFs) or other products based on bitcoin or cryptocurrencies to retail investors anytime soon.” line_height=”1.4″][tm_spacer size=”lg:25″][tm_heading tag=”div” custom_google_font=”” text=”n a Staff Letter: Engaging on Fund Innovation and Cryptocurrency-related Holdings, Dalia Blass, the SEC ’s Director of the Division of Investment Management, posed 31 detailed questions over how funds would value, store, and safeguard fund holdings, as well as concerns over whether investors understood the risk of these investments, and the potential for market manipulation.”][tm_spacer size=”lg:63″]
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[tm_heading tag=”h5″ custom_google_font=”” font_weight=”600″ text=”Use psychological pricing methods.” line_height=”1.4″][tm_spacer size=”lg:23″][tm_heading tag=”div” custom_google_font=”” text=”The SEC has been skeptical over pressure to launch bitcoin funds to appeal to retail investors, as well as expressed concerns over initial coin offerings, determining that the latter should be treated as securities sales and thus conform with existing investor protection rules, according to the WSJ.”][tm_spacer size=”xs:30;lg:35″][tm_heading tag=”div” custom_google_font=”” text=”Last year, the SEC rejected two proposed ETFs that would directly own bitcoin, including one from Cameron and Tyler Winklevoss, arguing that the global market for the digital currency wasn’t transparent enough to support sufficient oversight.”]
[tm_spacer size=”xs:30;lg:52″][tm_heading tag=”div” custom_google_font=”” text=”Some fund companies hoped that the SEC might relent after two Chicago exchanges late last year launched futures contracts on bitcoin. Those contracts are regulated by the Commodity Futures Trading Commission, a smaller federal agency whose rules allow Wall Street to more easily market new products”][tm_spacer size=”xs:30;lg:68″]
[tm_heading tag=”h5″ custom_google_font=”” font_weight=”600″ text=”Demonstrate the differences” line_height=”1.4″][tm_spacer size=”lg:23″][tm_heading tag=”div” custom_google_font=”” text=”Mutual funds and ETFs must value their assets at the close of each business day to calculate a new asset value (NAV). The staff note that appropriate valuation is important, as it determines fund performance, what investors pay for mutual funds, what authorized participants pay for ETFs, and what they receive when they exit, among other issues.”][tm_spacer size=”sm:30;lg:68″][tm_heading tag=”h5″ custom_google_font=”” font_weight=”600″ text=”Offer a money-back guarantee” line_height=”1.4″][tm_spacer size=”lg:23″][tm_heading tag=”div” custom_google_font=”” text=”The thrust of the CNBC report is that the SEC’s concern is fixated on structure, rather than arises from a more bedrock concern about whether the agency wishes to make it easier for retail investors to enter a market that’s vulnerable to the fraud and manipulation Clayton has outlined.”][tm_spacer size=”sm:30;lg:68″][tm_heading tag=”h5″ custom_google_font=”” font_weight=”600″ text=”Test your offer and price, and be creative.” line_height=”1.4″][tm_spacer size=”lg:23″][tm_heading tag=”div” custom_google_font=”” text=”Just last week, the SEC confounded these expectations, by asking sponsors to withdraw proposals to offer ETFs based on bitcoin futures.”]
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