Will Trump Make A Bitcoin ETF More Likely?
Optimistic investors view President Donald Trump’s interest in relaxing regulation as a sign that a bitcoin ETF will come to fruition, according to MarketWatch. Analysts as a whole, however, are less convinced. Investors are awaiting a decision March 11 on a bitcoin ETF by the Securities and Exchange Commission on one of the bitcoin ETFs.
On Monday, Trump signed an executive order reduce the number of federal regulations, requiring two regulations to be cut for every new one created.
SEC Chairman Favors Less Regulation
Jay Clayton, a Wall Street lawyer Trump picked to be the next chairman of the SEC, has also said he wants to ease regulation.
But analysts cautioned that while approval of a bitcoin ETF is more likely under the current administration, the bitcoin issue is still uncertain.
Phil Bak, the former head of ETF listings at the New York Stock Exchange, said bitcoin remains a volatile and complex technology, and there is no easy way to “short” bitcoin— to bet on a decline in prices.
Bak, who is now the CEO of ACSI Funds, which runs the customer satisfaction ETF ACSI, -0.55%, said an exchange listing would bring trading efficiencies that would ease bitcoin’s liquidity. He said he would support the fund’s approval.
ETF Could Boost Bitcoin Investment
Analysts have estimated that $300 million could enter the bitcoin ecosystem in the first week after a fund is approved.
The SEC has to be careful before approving something that’s untested, Bak said, but the government has no right to tell people what they can and can’t invest in.
The SEC said it would either approve or disapprove the Winklevoss Bitcoin Trust ETF on March 11, which was the first such ETF filed, in 2013. Two other firms that have filed for bitcoin ETFs are SolidX, which filed in July, and Grayscale Investments, which filed last week. Grayscale operates the Bitcoin Investment Trust.
The SEC chose not to comment.
A spokeswoman at Winklevoss Capital could not be reached for comment.
Analysts Voice Skepticism
Other analysts are not optimistic about bitcoin ETF approval.
David Brill, the former general counsel for Gemini, has said that passage is unlikely. Gemini is a bitcoin custodian and exchange run by Tyler and Cameron Winklevoss, who also operate Winklevoss Capital.
Spencer Bogart, a bitcoin analyst at investment bank Needham Co., said earlier this month that the likelihood of the ETF’s approval was very low. He said there is no reason to disapprove the Winklevoss Bitcoin ETF. But the confluence of doubt, fear and uncertainty, along with basic incentives at the SEC, will make it very difficult.
Bitcoin’s volatility remains a key hurdle from a regulatory standpoint. After hitting nearly $1,200 earlier this month, prices fell to about $760 in about a week.
Michael Arone, chief investment strategist at State Street Global Advisors, said financial regulations will be looser under Trump. One would think this would mean an easier passage for a Bitcoin ETF, but it remains too early to tell. Arone’s firm launched the first gold-tracking ETF GLD, +0.42% and the first ETF in general, the SPDR SP 500 ETF SPY, -0.62%
Featured image from Shutterstock.
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