cryptocurrency regulation

A lot of cryptocurrency enthusiasts have high hopes for an approved ETF. Such an Exchange Traded Funds could prove to be an invaluable tool to attract more retail investors. Particularly the VanEck ETF proposal is of great interest to many enthusiasts. Even so, there are still a lot of factors which most people seemingly haven’t taken into account as of yet. 

It’s not a Real ETF

There are many different types of ETFs in the financial sector. To this date, no such trading vehicle linked to cryptocurrencies exists. There’s a good reason for that” Bitcoin lacks any official regulatory status in the United States. Until that situation is resolved, it seems unlikely a full-fledged Bitcoin ETF will come to market in the near future. It is not impossible, but it’s not what VanEck is seemingly pursuing as of right now. 

Instead, what the company proposes can be best classified as a “partial ETF”. In fact, there are genuine concerns VanEck isn’t going to pursue the real deal anytime soon. Some naysayers claim the company seeks to attract investors with buzzwords, even though they will not be offering something that doesn’t exist today. While that is not illegal by any means, it could hurt the Bitcoin industry more than it would help.

Are Institutional Investors a Factor?

Over the past few years, there have been numerous claims of how institutional investors would shift the balance of power in favor of Bitcoin and other cryptocurrencies. However, there has never been any official indication these institutional investors are even remotely interested in Bitcoin or cryptocurrencies in general. The VanEck debacle only seems to confirm this even further, as there doesn’t appear to be any real interest in this product at this time.

Even if VanEck’s half-ETF would gain approval in October of 2019, there are plenty of concerns as to who will be interested in exploring this option. That is another big hurdle to overcome. So far, there is zero indication that this trading vehicle will obtain regulatory approval in 2019, which could also explain the lack of overall interest so far.  However, with a potential launch date looming rather close, one would expect a bit more enthusiasm among the target audience. 

No Regulatory Approval Expected

If there is anything Bitcoin enthusiasts can take for granted, it is how regulators will not approve an ETF. They will not do so in 2019, nor in the near future. To effectively do so, there need to be far better regulatory measures regarding cryptocurrencies in general. Until that happens, there will be no impact by institutional investors, assuming there would be any impact, in the first place. 

One service provider potentially benefiting from this situation is Bakkt. The platform is expected to be released later this month. It will provide exposure to Bitcoin and aims to target institutional investors at the same time.  That being said, it has proven incredibly difficult to bring Bitcoin to a bigger audience. It seems the entire world is holding its breath in light of clearer regulatory measures. As such, the coming years may prove to be rather crucial, either for better or worse. 

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