Even though the U.S. Securities and Exchange Commission announced its decision on the VanEck SolidX Bitcoin ETF proposal ahead of schedule, it chose the more likely of three scenarios and delayed its final ruling for another 90 days.
The proposal, which is one of the two Bitcoin ETFs under consideration by the U.S. SEC, will now see a possible decision on August 19, or face another extension until October 18. The second proposal, by Bitwise and NYSE Arca is also pending and will be ruled upon in the coming months.
Why is a Bitcoin ETF important for the market?
The reason why market participants are keen on a Bitcoin ETF approval is that it would greatly facilitate participation by institutional investors, who have shown increasing interest in digital assets but are on the fence in the face of issues such as lack of reliable exchanges and custody hassles.
Why is the SEC delaying its ruling on Bitcoin ETFs?
The SEC, tasked with investor protection, is rightly concerned with several aspects surrounding the trading, price discovery and transparency of crypto markets. Given how most crypto exchanges have been unregulated and prone to manipulation, hacking and wash trading, there is an understandable lack of trust around Bitcoin’s price movements and their legitimacy.
As per the official document issued by the SEC, the regulatory body is inviting comments which indicate that the proposed system is “designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,” and “to protect investors and the public interest.”
How has Bitcoin price reacted to the decision?
Surprisingly, Bitcoin’s price has shown resilience in the face of yet another delay. The leading cryptocurrency is still trading in the $7,900 – $8,000 range and appears to be consolidating there.
If these price levels hold this week and remain strong over the weekend, we can expect altcoins to appreciate in price and overall market capitalization to grow further.
For now, it appears that the market has taken the SEC’s decision in stride, but we may not see the expected explosive price appreciation which would have followed approval of the ETF proposal.