Working back channels at the SEC and the CFTC in particular, we’ve come across two sources that seem to be ‘nearly certain’ that the crypto ETF conversation is about to take a seriously bullish turn.
The background for the optimism is tempered with some specific downside: coming crypto and ICO regulations. Both sources said that the ‘nearly certain’ approval of a Bitcoin ETF and other crypto ETF products will be announced alongside the first set of crypto regulations of substance from both the SEC and the CFTC.
Our most optimistic source, coming from the CFTC, said the following, “I would call it 90% at this point. The crypto markets have moderated and regulators have watched the lack of drama surrounding Bitcoin futures across several global exchanges. The price moderation and adoption of a ‘peer product’ is what the conversations have centered around. In January we were justifiably concerned about a bubble and the harm a quickly approved product could attract speculators and create losses that led to significant lawsuits. Now, those factors seem to be mitigated significantly.”
The second source, a former SEC employee who left the regulator two weeks ago, had this to say, “I would expect a positive outcome in September – or if it gets strung out a little further it is simply a few ‘dotted i’s and crossed t’s’ are being finalized on larger regulatory language in the crypto space. To be clear, most of the regulation will be first focused on ICO’s and the issues those pose for retail investors at the moment. US residents are sending money to all sorts of exotic locations to invest in unregulated instruments with absolutely zero recourse for losing every cent they’ve put at risk. ICO regulation will begin to solve those issues and keep client assets ‘onshore’.
Both sources made further comments all having to do with the runway that Bitcoin and crypto futures (Ethereum) have provided for ETF products taking center stage late this year and into 2019.
The regulatory agencies are fully aware that once this door is cracked open it will create a flood of submissions, approvals, new products in every color, shade, and denomination connected to crypto. Thus, the congruent push for regulation that will provide the architecture for fair and equitable markets to surround the newly regulated asset class.
Still, this is big news as we are essentially being told that an approval is all but guaranteed. If you take a look at price movements connected to industries that joined the ETF movement and the institutional assets that followed, an expected spike in prices isn’t far-fetched.
One reason why billionaires and well-known asset managers have been heard discussing, and investing in, cryptocurrencies via pure means or via crypto hedge funds. Interesting indeed.