Companies active in the bitcoin world need to band together when it comes to regulation. The Winklevoss twins have been trying to get their bitcoin ETF approved for some time now, without much success. Interestingly enough, they received some help from Circle in the form of an official response sent to the SEC. It is doubtful this will hasten the approval of this ETF, even though it is a positive sign for sure.
Institutional investors across the US can benefit greatly from having access to a regulated bitcoin investment vehicle. After all, they are not buying cryptocurrency directly, negating most of the risks associated with this type of trading activity. Instead, they invest in an ETF that is publicly traded and reap the rewards from bitcoin’s price movements through an alternative financial vehicle.
Moreover, it is becoming somewhat difficult for large investors in the US to buy bitcoin directly. The lack of regulated domestic providers can be a drawback for some traders, that much is certain. Instead, they will use foreign bitcoin trading platforms, which is anything but convenient. Introducing a bitcoin ETF could resolve all of these problems and more, assuming the SEC will approve it in the first place.
It is nice to see Circle put in a good word to the SEC regarding the Winklevoss’ bitcoin ETF. Many people feel these financial vehicles will make bitcoin more appealing to mainstream investors. Unfortunately, the SEC takes its sweet time to render a decision regarding this particular trading vehicle. Although the deadline for their decision is drawing near, the situation can head in either direction. With the help of Circle, things may evolve in the right direction moving forward.
A Bitcoin ETF Offers Many Advantages
Circle stated the following in their letter to the SEC:
“The listing of the Winklevoss Bitcoin Shares would open up a conventional route into this asset class for institutional and individual investors while eliminating many of the risks associated with handling cryptographic keys and dealing with unregulated online exchanges and custodians. Gemini does not offer such products and would be able to serve as a trusted, regulated spot exchange for institutional market participants driving the arbitrage mechanism that ensures efficient pricing between spot price and the Winklevoss Bitcoin Shares.“
All things considered, this is a clear nod of approval for the Winklevoss bitcoin ETF by Circle. Having more companies issue similar comments could help get this valuable trading vehicle approved when the deadline passes in a few weeks from now. Although the bitcoin market remains subject to volatility, market liquidity has been improving as of late. It only takes a small nudge in the right direction to make bitcoin trading fire on all cylinders for both traditional and cryptocurrency traders all over the world.
Last but not least, the Winklevoss bitcoin ETF can bring more market stability to the ecosystem. Gemini, the exchange where this ETF will be traded, does not offer leveraged trading like most other US exchanges. As more volume comes to this exchange, it becomes somewhat easier to find a stable price and improve bitcoin discovery as a whole. it will be interesting to keep an eye on whatever the SEC decides to do in the coming weeks.
Header image courtesy of Shutterstock
