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The regulator’s warning was unambiguous. “There are a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to retail investors,” wrote Dalia Blass, a director at the Securities and Exchange Commission, which oversees the US investment industry.
In a letter sent last month to two trade groups, Ms Blass outlined more than 30 questions that she said needed to be resolved before the SEC would give the green light to mutual funds and exchange traded funds that invest in bitcoin and its peers.
“Until the questions . . . can be addressed satisfactorily, we do not believe that it is appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products,” she wrote.
Ms Blass’s letter was sent in response to a swath of applications from ETF providers to launch funds tracking cryptocurrencies. The surging prices of digital currencies such as bitcoin and Ripple last year, along with the launch of derivatives markets by two exchanges, gave hope to ETF executives that the asset class had become sufficiently mainstream that their products would be approved.
In a letter sent last month to two trade groups, Ms Blass outlined more than 30 questions that she said needed to be resolved before the SEC would give the green light to mutual funds and exchange traded funds that invest in bitcoin and its peers.
“Until the questions . . . can be addressed satisfactorily, we do not believe that it is appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products,” she wrote.
Ms Blass’s letter was sent in response to a swath of applications from ETF providers to launch funds tracking cryptocurrencies. The surging prices of digital currencies such as bitcoin and Ripple last year, along with the launch of derivatives markets by two exchanges, gave hope to ETF executives that the asset class had become sufficiently mainstream that their products would be approved.
I think the ETF moment has gone for now. It won't be until 2020 that we will see an ETF, and only if volatility has reduced and regulation of exchanges is increased.