When it comes to Bitcoin ETFs, the American crypto market is desperate. The U.S. Securities and Exchange Commission (SEC) keeps delivering blow after blow of bad news, with the impact leaving traders reeling. The Winklevoss twins have had applications denied twice, and recently the SEC came out and said no to nine BTC ETF applications in a single hearing. Every time the SEC delivers another slice of bad news, the crypto markets take a big hit, which indicates that the American crypto market is crying out for the first BTC ETF.
Coinbase is entering the BTC ETF race at a critical time and some might even say that the leading exchange is entering the race foolishly. While Coinbase hasn’t yet said how it will solve the issue of “external market manipulation” – the SEC’s main reason for declining BTC ETFs – but it does have a few tricks up its sleeve.
The Coinbase Equation
While the SEC has generally been negative on the BTC ETF front, Coinbase has a handful of factors that could help it become the first company to create and list an American BTC ETF. Coinbase is quickly becoming the go-to platform for crypto investors thanks to its advanced Know Your Customer (KYC) and anti-money laundering (AML) processes. These two processes give Coinbase a lot of information about every account and transaction on its platform. The fact that it already has these processes in place – coupled with its large trade volume in the crypto world – could cause the SEC to be a little more to think about with this particular ETF application.
New Faces at the SEC
In addition to Coinbase’s superior KYC and AML checks, it also has one other potential boost – Elad Roisman. Roisman has recently been appointed to the SEC by the direct orders of Donald Trump and he is well known to be friendly towards cryptos. Previously he has called for the SEC to revise its processes and adapt its regulations to the new digital currency market, due to the fact that they function differently to traditional fiat currencies. With a new crypto friendly member at the SEC, Coinbase – at minimum – has hope that it could be the first Bitcoin ETF to meet what the SEC is looking for.
Pressure from Europe
Europe is seen as a fairly crypto friendly continent, as a number of countries within Europe have already passed crypto laws. European investors and institutional money have had access to a BTC ETN for a little over three years now, and the company behind it has decided to create a USD denominated version – opening the door to American investors. The two financial vehicles are very similar, the only major difference being that an ETN is a little more tax friendly. With Europe becoming a hotbed for crypto activity, American crypto exchanges know they are racing against the Europeans to be the first to launch a Bitcoin ETF.
While the SEC has yet to publicly announce a date for a decision on the Coinbase Bitcoin ETF, we can probably expect to hear something early in 2019. Coinbase has the best shot at getting its BTC ETF approved out of the recent applicants, so if the SEC delivers more bad news, we can expect the crypto markets to react negatively. Let’s all keep our fingers crossed the SEC finally gives the green light, so institutional money can flow into the crypto market.