SEC ruling on bitcoin ETF marks a turning point either way

 
March 6, 2017

photo istock

by Susannah Bruck

 

 

graphic courtesy New Jersey Institute of Technology Online
 

There are lots of growing pains involved in getting virtual currencies off the ground and into the mainstream economy. Bitcoin, is no exception.

People are cautious with their money, and most don’t want to be the first to take the risk of potentially losing their investment if the currency tanks.

However, virtual currency is gaining in popularity due to some major advantages it offers over centralized currency, and is poised to take off within the next few years.

Recent significant developments signal the acceptance of bitcoin as a legitimate currency for investment, a big step toward widespread use.

Currently, it’s not easy to invest in bitcoins, but many people are interested in a decentralized currency, and are eager to get in on the potential of bitcoins.

Bitcoin also has the advantage of being a resource that can’t simply be printed to create more — it’s based on math and is unlike any other investment asset. 

Ten years after its inception, bitcoin has become a popular global currency, and a few groups are even trying to bring it into the traditional investment marketplace as an exchange traded fund. There’s been a lot of debate over whether this step should even be allowed.

The ETF ruling: A turning point

The U.S. Securities and Exchange Commission is set to rule on Tyler and Cameron Winklevoss’ bitcoin ETF on March 11, after several years of revisions and amendments.

Bitcoin has been hitting record highs, selling for $1,263 in late February, overtaking the price of gold and adding 28 percent in value in 2017.

If the Winkelvoss ETF is approved, it’s estimated that the fund could result in $300 million in assets in just a week.

There are some concerns about the ETF, however, including the volatility of bitcoin as a currency. Since it’s not tied to any government or bank, it is subject to enormous fluctuations.

Because of this, there are major concerns that the fund won’t do a good job of tracking the actual value of the shares over time.

Also, it could be potentially illegal, according to Bob Rice, a contributing editor to Bloomberg. The prospectus provided by the brothers warns that in the future, it may become illegal to own these shares, since it’s unclear how regulations will evolve as time goes on.

So how will the March 11 decision affect the future of bitcoin investment?

If accepted, it will pave the way for other funds and make trading bitcoins easier.

If rejected, it gives competitors more information about how to succeed in the next appeal to the SEC.

So where is bitcoin headed? The ruling and subsequent investment efforts of these virtual currency pioneers will be the determining factors in the success or failure of the currency.

To learn more about the potential of bitcoin, take a look at the accompanying infographic by the New Jersey Institute of Technology.

Susannah Bruck is a freelance writer/editor

 


Topics: Bitcoin, Cryptocurrency, Investment / Valuation, Regulation, Trends / Statistics


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