'Big change' despite rejection of Bitcoin ETFs

Bitcoin advocate says advisors still have to be educated on asset class

'Big change' despite rejection of Bitcoin ETFs

The US Securities and Exchange Commission rejected requests to list nine cryptocurrency ETFs this week but the decision still represented progress, according to a leading Bitcoin advocate.

The SEC cited concerns about manipulation and market surveillance, echoing worries expressed when declining a fund run by the Winklevoss twins last month.

For investors eager to enter the Bitcoin US market, there is still hope in the VanEck Associates Corp fund and another run by SolidX Partners Inc. The regulator will rule as early as next month on requests to list them.

Jack Tatar, managing partner of Doyle Capital Management and co-author of Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond, was not surprised by the SEC’s decision but said that VanEck is a “different beast” and stands a better chance.

“[The SEC reasoning] was more thoughtful than we’ve seen in the past. What it is showing to me is there is a greater receptivity on the part of the SEC to understand this asset and understand potentially how it can fit as an investment. I think that is a big change.

“Two years ago they weren’t even viewing this asset class as an investment and saying that investors should stay away from this. I think now that there has been a level of education to the SEC and they are being more thoughtful about these types of decisions.”

One commissioner objected to the decision, Hester Peirce telling CoinDesk that the move to block a bitcoin ETF is a disservice to both investors and innovators.

Tatar, who is also an advisor to 3iQ, disagreed with that view but said the real disservice to investors is the lack of education in the wealth management industry; from individual advisors to firms bound by fiduciary responsibilities and the number of poor products being pedalled.

He said: “That’s a big reason we’ve had the crypto crash because people got involved in assets they had no knowledge of with limited resources. There’s no advice being given by financial professionals and that’s a bad thing. This is not going to go away so let’s figure out a way to help the investor make a good decision.”

He added: “It does a disservice to investors for an advisor not to be able to discuss it. We have billions of dollars being transacted in this, we have companies that potentially could be the next Amazon or Google being created in this space and we’re not allowing investors to make a decision about which one of these could potentially be a long-term growth company. That’s not fair.”