Cryptocurrency
Crypto-based funds crawl toward mom and pop via @rollcall
As reported by Roll Call, “A fund based on cryptocurrency will eventually pass muster at the Securities and Exchange Commission despite the agency’s denials of all previous efforts, predicts its lone Democratic commissioner. “Robert J. Jackson Jr. expects some applicant to meet the minimum requirements for a cryptocurrency-based fund that could be traded by ordinary investors. […]
As reported by Roll Call, “A fund based on cryptocurrency will eventually pass muster at the Securities and Exchange Commission despite the agency’s denials of all previous efforts, predicts its lone Democratic commissioner.
“Robert J. Jackson Jr. expects some applicant to meet the minimum requirements for a cryptocurrency-based fund that could be traded by ordinary investors. A number of cryptocurrency-based applications await the agency’s decision, he said in an interview, though he wouldn’t speculate on whether one of those will get approval, or when.
“’Eventually, do I think someone will satisfy the standards that we’ve laid out there? I hope so, yes, and I think so,’ Jackson said.
“Several proposals to list such shares, most of them based in bitcoin, for trading among the general public have failed to clear the SEC.
“Approval would be a milestone for cryptocurrencies, of which regulators have been wary in part because of the volatile prices. Bitcoin, for example, is trading at about $3,400, down from a high of more than $19,000 in December 2017. Any fund based on it would show similar movement.
“Because the fund would trade securities — not cryptocurrencies that are largely exchanged for cash without regulatory oversight — it would need to satisfy requirements that apply to more ordinary funds.
“Among the more prominent SEC actions on such funds was a 3-1 vote in July to reject a proposal by Bats BZX Exchange Inc. to list and trade shares of the Winklevoss Bitcoin Trust. The agency deemed the fund inconsistent with Securities Exchange Act requirements to prevent fraudulent and manipulative acts.
“The Bats exchange that would have hosted trading of the fund argued that bitcoin markets are inherently difficult to manipulate. But the SEC found that the proposal didn’t establish the kind of surveillance common in stock markets. The commissioners were also concerned with the lack of liquidity in certain bitcoin markets, their trading volume and the ability to safeguard proprietary information.
“That decision affirmed one made by the agency’s staff a year earlier.”