[2018-11-10] Bitcoin ETF Could Attract Billions in New Investment: VanEck

[Lmaooo]

A bitcoin ETF could attract billions of dollars in new investments, so the Securities and Exchange Commission (SEC) should treat pending proposals as an opportunity to regulate the crypto market, said crypto exchange-traded fund advocate Gabor Gurbacs.

Gurbacs, the director of Digital Assets Strategy at VanEck, made this claim during an interview with CNBC Africa’s Crypto Trader. The comments came in the wake of VanEck’s persistent requests to the US securities regulator to approve their bitcoin ETF proposals. The SEC so far has rejected nine similar proposals, citing concerns about manipulation and market surveillance in the crypto spot market.

VanEck has been in the news for meticulously modifying its ETF application to address the SEC’s concerns. In times when the nascent crypto industry sometimes still works in a grey area of law, VanEck is attempting to launch a crypto ETF under a conventional regulatory watch.

If the SEC approves their ETF application, then it could certainly pave the way for both regulators and industry companies to understand how crypto fits into the federal regulatory framework.

In the interview, Gurbacs said that VanEck’s bitcoin product would safeguard the interests of investors while preserving the overall benefits associated with digital currency trading.

“What sets our ETF apart is that it’s a physical bitcoin ETF. So, it stays true to the bitcoin you own in underlying,” he explained. “It’s fully insured so if there is any theft, hacks or losses; then the insurance covers it.”

Gurbacs also highlighted how they would protect the investors from price manipulation.

“The pricing,” he explained, “that we use for bitcoin comes from our indexing subsidiary. It is a regulated entity which provided the first financial standard and regulated indices. The ETF is institutional-oriented, so we have a cap of 25 bitcoins per basket.”

CCN | https://www.ccn.com/bitcoin-etf-could-attract-billions-in-new-investment-vaneck/

[BitHodler]

I get it, they look to market their product in the best possible way, but it somehow starts to look like they are getting desperate. It would be wise for them to lay low for a while until the SEC actually shows signs of willingness.

People always highlight the positive side of events here, but what if there simply isn't the demand to back it up? In other words, the approval of this ETF is just 50% of the job done, the other 50% is the demand.

The bear market is a mood-killer. Every part of this industry is suffering, and it doesn't seem like there is much improvement to look forward to. I'm not trying to be bearish here, just realistic, wish more people were so.

[hatshepsut93]

A bitcoin ETF could attract billions of dollars in new investments, so the Securities and Exchange Commission (SEC) should treat pending proposals as an opportunity to regulate the crypto market, said crypto exchange-traded fund advocate Gabor Gurbacs.

But the SEC said that they don't approve Bitcoin ETF's because Bitcoin is unregulated, the market is global so manipulation on one exchange will result in price change on all others. Sure, they can regulate American exchanges and ETF's, but they can't do anything about other countries. So, an ETF really can't be an opportunity to regulate Bitcoin.

[veleten]

what avoids me completely is how does VanEck plan to protect the investors from price manipulations?
this would require affecting the bitcoin price , or cornering the market
ok , you have a cap of 25 bitcoins per basket, but if the asset price is plummeting, no indexing would save you
say bitcoin price is down 25% , how on earth will Vaneck protect his investors?

[cr1776]

A few things:
1. The size of the market will help protect from manipulation of price.  Sure, at small exchanges, there could be manipulation, but then you will see someone (perhaps even VanEck) who will open accounts at all the large exchanges and then arbitrage between the ETF and the exchanges which will help keep the price consistent between exchanges.  As it is someone in South Korea (for example) could attempt to manipulate an exchange there, but being able to execute a trade with an ETF instantly to balance it out will help to stabilize prices across the world.

2. Adding billions (potentially 10s to 100s of billions if you even had 1% of the world markets in crypt), will stabilize prices everywhere.  Someone with 500 BTC wouldn't be able to manipulate the price.  One would need 10s of thousands of BTC, or 100s of millions of dollars.  It would be extremely difficult to get a 25% price drop when you have a much larger market.

3. An approval would increase the fiat price dramatically given that prices are set at the margin.  It doesn't take a lot to move the market.

4. 25 BTC is a reasonable size per basket, but certainly doesn't limit it to institutional investors at current prices.

5. I hear a lot of people talking about it as some diversification.  With an easy vehicle for investment, I could see a lot of people putting 1% (or even 0.1%) of their portfolio into crypto.  That is a huge market but there are few (as a percentage) people who will do it now.  Back in 2010 and 2011 it was even worse, at first you mined to get coins pretty much exclusively which really limited things.  But even Gox and other ways to purchase were not as easy as going to Fidelity or Vanguard and saying "buy me $500 worth of bitcoin".   Even in 2013 or 2014 it was difficult to buy and many people didn't - to their own detriment.

One important point is that if they get approved, it will make it easier for other groups to do so in order to provide different minimums for purchase.  Likewise, it is nice that a large, experienced group is continually going back to the SEC with revisions to address their concerns because it will either result in approval or it will result in demonstrating that the SEC is continually moving the goal posts in order to avoid approving it.

[Betwrong]

I agree pretty much with everything @cr1776 said above, and I just want to say why, in my opinion, the SEC is procrastinating with any approval.

Just recently I was researching on Bernard Madoff, the former NASDAQ Chairman known for leading $65 billion Ponzi scheme, the biggest financial fraud of all time. And I was shocked by the fact that the same SEC, we are talking about, was constantly failing to uncover the scheme despite a series of red flags and tips from various people.

There's a good Italian proverb saying "The scalded dog fears cold water". It seems to me that the SEC now behaving exactly like the dog from the proverb.

[felixesteban]

Market cap volume is really low now, if we reach trillion dollar levels, some problems such as high volatility and manipulationd will be reduced. This will certainly speed up the arrival of new investors. If they approve Bitcoin ETF, it will be very positive, but I think they will not make such a decision for a long time.

[LeGaulois]

Everyone is going to try his luck with the SEC, but I don't think any has a real chance, no matter what your name is. (Or maybe the ETF from the twins). The SEC is all about applying the laws not creating any. It has to come from a level ahead. The politic, and here it's another problem bigger than the SEC

[1Referee]

Market cap volume is really low now, if we reach trillion dollar levels, some problems such as high volatility and manipulationd will be reduced.

Manipulation in Bitcoin isn't as bad as it used to be. The benefit of a well distrubited market where we have plenty of large exchanges with their own market makers is that whales have to compete with other whales. Every attempt to steer the market in a different direction can be nullified pretty easily by other whales, which we have seen happen not that long ago.

In other words, whales have to carefully calculate every one of their trades, because there are always bigger whales with different plans.

Volatility on the other hand isn't that much of a negative feature, especially when you take into consideration that volatility attracts liquidity. Stocks lacking volatility hand out dividends to attract liquidity, Bitcoin does it with volatility.

[timerland]

The worries are obviously there with manipulation, as we see with silver and gold which also had ETFs and apparently started being manipulated after ETFs came out. Of course, this claim is not totally verified, as with all such claims.

But anything that is traded on a large scale that is not bitcoin itself in my opinion has the chance of being manipulated, because as far as I know, there are no requirements as to the issuer of the ETF having to hold actual bitcoins to back the value of the fund.

Anyhow, there is no way to stop it if it was to get approved by the SEC, but it's a slim chance to none looking at right now. All previous applications have been either rejected or pending review, and I don't think there's a big chance to change in the future for the VanEck ETF.

[1BTC EQUALS 1CAR]

I wish someone just bribe the people on the SEC or just use their influence to convince them so the price of bitcoin will stop getting dragged deeper and deeper. We really need some big news by the end of the month for at least to bring back the confidence of huge investors. I don't want to wait for a couple of years just because btc is back to $1k again.

[BitForx]

Bitcoin ETFs disrupt the actual reason and thought behind a decentralized cryptocurrency. We are always happy to see Bitcoin grow and adopt traditional financial instruments, but ETFs are not the way to go. How can VanEck guarantee the stability in price? How can investors be sure that the price won't be manipulated?

[magneto]

If the SEC approves their ETF application, then it could certainly pave the way for both regulators and industry companies to understand how crypto fits into the federal regulatory framework.

I don't know why people are still speculating on the ETF approval after so many ones that have been denied. I've long stopped believing that the SEC would change their decision and allow these major ETFs to be launched.

In the interview, Gurbacs said that VanEck’s bitcoin product would safeguard the interests of investors while preserving the overall benefits associated with digital currency trading.

“What sets our ETF apart is that it’s a physical bitcoin ETF. So, it stays true to the bitcoin you own in underlying,” he explained. “It’s fully insured so if there is any theft, hacks or losses; then the insurance covers it.”

Gurbacs also highlighted how they would protect the investors from price manipulation.

“The pricing,” he explained, “that we use for bitcoin comes from our indexing subsidiary. It is a regulated entity which provided the first financial standard and regulated indices. The ETF is institutional-oriented, so we have a cap of 25 bitcoins per basket.”

As they say themselves, the ETF that they are launching is institutional based.

Assuming if it does get approved, then sure, investments amounting in the billions would flow in and there could potentially be a major bull market driven by this. But then, there is risk of manipulation within the market with that institutional money which I wouldn't be so positive about. Furthermore, it seems like it would still make more sense for institutions to hold the bitcoin themselves if they were going to invest in a large scale.

[pixie85]

If the SEC approves their ETF application, then it could certainly pave the way for both regulators and industry companies to understand how crypto fits into the federal regulatory framework.

I don't know why people are still speculating on the ETF approval after so many ones that have been denied. I've long stopped believing that the SEC would change their decision and allow these major ETFs to be launched.

Maybe because there has never been a proposal to create ETF that will hold Bitcoins. All the previous ones were like futures. They were meant to speculate on the market value of something they don't hold. Also, they partnered with CBOE which is the largest exchange in the US. There can be no better set ETF than this one and they made sure to hire the best lawyers to prepare their applications.

[manfredmann]

Yes, because even people really do not know what is ETF all about as long it was being approve it will create a hype and many will be encourage to invest in bitcoin. People were just like to believe that ETF is for the good of cryptocurrency and that make sense why people will going to love and invest more if it will be approve.

[1Referee]

But then, there is risk of manipulation within the market with that institutional money which I wouldn't be so positive about.

I'm not at all concerned about the manipulation aspect, and it might not even be the case at all. Sure, they could try to lower the market to enter and leverage their positions, but it's more likely that they'll try to support the market (and thus their holdings) rather than to pee in their own water.

I'm certain that institutions are just as afraid of manipulation from OG Bitcoin whales as we are afraid of institutional manipulation. In the end, we tend to call drastic price increases/decreases manipulation, while in reality it's just a large trader opening or closing its positions. In a market lacking liquidity, large players have no choice but to 'pump' or 'dump' the market 5-10%.

Furthermore, it seems like it would still make more sense for institutions to hold the bitcoin themselves if they were going to invest in a large scale.

I'm not so sure of that. Institutions are used to buy financial products tied to whatever asset for the sake of convenience, and of course to counter the risks associated with them. On top of that, it's a nightmare to securely store tens or even hundreds of millions worth of Bitcoin. I'm certain that 9/10 people here don't even know what secure coin storage actually means.

[dreamhouse]

Don't see why Bitcoin ETF has so many troubles, they should have traded long ago, as the future already trades there