According to James Nguyen, the co-founder and managing partner of cryptocurrency and blockchain investment fund Anti Hero Capital, the introduction of an overseas Bitcoin ETF would consolidate the asset class’ legitimacy in the global and Australian market.
While the SEC has rejected nine applications for Bitcoin ETFs, Nguyen noted that Australia has already “subscribed” to the asset class as the Government has implemented cryptocurrency regulations, while the tax office has publicly clarified their stance on cryptocurrencies.
The SEC Believes the Cryptocurrency Industry is too Immature
An ETF is a form of investment fund that allows investors to be exposed to an asset without owning the asset themselves. The ETF’s value follows Bitcoin’s price. Investors however own and trade individuals shares form the mutual fund and do not need to hold or own any Bitcoin themselves. Since owning Bitcoin requires some level of technical understanding, a Bitcoin ETF would ultimately reduce the barrier of entry when it comes to investing in the cryptocurrency industry.
It’s therefore no surprise that there have been over ten different applications for Bitcoin ETFs.
Jan VanEck, the CEO of investment firm Van Eck who had earlier proposed to list their own Bitcoin ETF, stated:
“A properly constructed physically-backed Bitcoin ETF will be designed to provide exposure to the price of Bitcoin, and an insurance component will help protect shareholders against the operational risks of sourcing and holding Bitcoin.”
Unfortunately, despite the sheer number of Bitcoin ETF submissions, the US Securities and Exchange (SEC) had rejected nine applications. They mentioned that the market’s liquidity was a large problem and noted that the market was still too immature.
The agency also noted that the Bitcoin market is not a market of significant size and can be exposed and vulnerable to price manipulation and fraud. While the SEC has rejected these Bitcoin ETF submissions, they made it very clear that it was a result of the market’s maturity and not its underlying technology and ability to innovate.
How ETFs will Impact the Australian Market
Nguyen noted that since the last fortnight, popular Australian cryptocurrency tokens like Power Ledger, Havven, and Ivy have shifted approximately 30 percent in price. These price changes were a good reflection of the overall sentiment of the local community.
The SEC’s open acknowledgment of the immaturity of the cryptocurrency industry has caused greater uncertainty from retail investors which may have contributed to the falls in cryptocurrency prices.
While the timing of the approval may be important, Australia, however, appears to be already onboard with the asset class. The Australian Government has implemented regulations around cryptocurrency investment, while the tax office has openly gained feedback from the public and publicly clarified its stance on how cryptocurrencies are classified.
Furthermore, the cryptocurrency and blockchain industry in Australia is booming and growing well. Despite the uncertainty of Bitcoin ETFs, it appears as though the Australian and global Bitcoin market are in the process of maturation.