October looks set to be a major month for bitcoin. The most important news is that the SEC approved the first bitcoin ETF despite US regulators wanting more oversight.
Bitcoin’s price has risen and fallen this year. The price of bitcoin against the US dollar plunged after it reached an all-time high in April at $64,000. The coin has been resilient despite China’s crypto ban and tightening of US regulatory belts following the subpoena by the SEC to Circle coin backer Circle. The cryptocurrency has risen to over 85% since its launch at $29,796 (22 July) Bitcoin reached $55,000 on 6 October. It was trading at $55,260 as of 10 October. This is its highest level since May.
Bitcoin continues its climb into mainstream finance. U.S. Bancorp, also known as US Bank, now offers custody services that include three cryptocurrencies for fund managers. This is a growing interest in cryptos, a diversifying asset class.
The bank is the fifth-largest US retail bank and a significant step forward in the cryptocurrency transition. NYDIG will be acting as a sub-custodian and the bank will offer to store private keys of bitcoin, bitcoin cash, and litecoin. Expect to see support for coins such as ethereum.
When will the SEC approve bitcoin ETFs? This is the big question. There are many Bitcoin ETFs awaiting approval from the SEC. According to Business Insider, Gary Gensler is the chair of the regulator and is cautious about market manipulation fears. In the US, no bitcoin ETF has been approved.
There were signs that attitudes at the SEC had changed. Gensler stated in September that he was open to the idea of a Bitcoin Futures ETF, as this would provide investors with greater protection under the Investment Company Act of 1941.
“We are quite bullish on approval,” James Seyffart (an ETF analyst at Bloomberg Intelligence) stated. “We don’t see Gensler or the SEC making positive comments about the 1940-act Bitcoin futures ETF at September’s end and then denials all of them less than a month later.”
The SEC delayed its decision on a quarter bitcoin futures ETFs for 45 days, putting it back until 21 November. Offerings from Global X and WisdomTree were all pushed back according to the Financial Times.
After many years of waiting, the approval would allow the US to join the bitcoin ETF party along with products already launched in Canada or across Europe.
The SEC approved several bitcoin lite ETFs. These funds track companies that are involved in cryptocurrency and do not hold it. Volt Equity’s ETF is one of these funds. It tracks companies who derive their income or most of their assets from bitcoin.
The Congress wrangling that has seen bitcoin under greater scrutiny is not helping matters. Gensler, the SEC chair, stated to Congress that he would like crypto products to be registered in the same manner security is according to the Financial Times. Tom Emmer, a Minnesota representative, says that the SEC has outstepped its boundaries and should treat cryptocurrencies the same as physical currencies or commodities.
The lawmaker stated to the Financial Times that “if the SEC were ever to declare one of these coins as a security, then the value of that token will plummet.”
For those who are interested in an ETF based on US bitcoin, November is a crucial month to watch. The SEC could appear more forward-thinking if it approves Bitcoin Futures ETFs. Gensler, however, told the House of Representatives that cryptocurrency was the “wild West”.
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