Milestone in sight: Will the Bitwise Bitcoin ETF proposal be approved?

• The Security and Exchange Commission (SEC) has to decide until the 13. October 2019 on the Bitcoin ETF application of the companies Bitwise and NYSE Arca.
• The company is very optimistic and explains that Bitwise is “closer than ever” to “approving a Bitcoin ETF”.

The SEC has not yet approved a Bitcoin ETF application. So far, all applications have been rejected claiming that the market is not yet sufficiently regulated and there are “many challenges” to overcome. For many investors in the crypto market, a Bitcoin ETF is a great opportunity that the market will be flooded with fresh capital and that this will have a long-term bullish effect on Bitcoin’s price movements.

The SEC has to make a final decision by October 13, 2019 as to whether the Bitcoin ETF application by Bitwise and the NYSE Arca will be approved or rejected. The SEC had already postponed the decision twice and thus disappointed many investors. Despite all previous developments, Matt Hougan, head of research at Bitwise, is still optimistic.

Approval for Bitcoin ETF “closer than ever”

Hougan stated in an interview with CNBC that all employees of the company are eagerly awaiting the decision and expect an approval:

We’re closer than we’ve ever been before to getting a bitcoin ETF approved. We will hear clearly between now and Monday what they think, and then, depending on what we hear, we’ll go forward from there. But it should be a very exciting week.

Hougan also says that over the years the market has become much more mature and has grown into a “well-regulated institutional world market”. In the past, the SEC has criticized that the storage of Bitcoin has not been sufficiently clarified and secured. Hougan goes on to explain that there are now many companies such as Coinbase or Fidelity that can offer this service securely and comprehensively:

Two years ago, there were no regulated, insured custodians in the bitcoin market. Today, … there are big names like Fidelity and Coinbase [with]hundreds of millions of dollars of insurance from firms like Lloyd’s of London

Furthermore, more and more crypto exchanges in the United States of America are regulated by the state, so that there is a constant control and monitoring of the activities taking place. In the process, more and more modern surveillance technologies are being used, which are provided by the New York Department of State and are thus fully monitored by the state:

Now, six of the 10 big crypto exchanges are regulated by the New York Department of State with market surveillance technologies in place. And, most importantly, two years ago, it was a one-sided, inefficient market. Today, we have $200-plus million in volume and regulated futures every day

Hougan sees a problem especially for small private investors. Large institutions have sufficient capital to secure their financial resources. However, the average consumer is often faced with the important decision of how to store their Bitcoin. According to Hougan, the approval of a Bitcoin ETF would solve this problem:

What the bitcoin ETF would allow everyday investors to do is have safe, simple, secure access to the wealth generation taking place in bitcoin and crypto. It would let financial advisors give it to their clients easily instead of them going rogue. It’s just trying to solve that problem of simple, secure access to what is emerging as a very important technology and a very important asset class in the market

A long way to go

As CNF reported three weeks ago, Bitwise published a 31-page report detailing why the time had come to approve the current application. However, while the Bitcoin market has reached many other milestones to date and the authorities have gained experience with Bitcoin and cryptocurrencies, this does not guarantee a positive outcome to the SEC’s decision.

Nevertheless, according to Hougan, the approval of the application would be a strong bullish signal to Wall Street investors that a further regulatory step has been overcome and a new investment opportunity is available. Whether this will actually have a positive impact on the Bitcoin price remains to be seen. At the time of writing, the Bitcoin price has been moving sideways (-0.80%) to USD 8,185 within the last 24 hours.