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SEC put forth reasons for delay in Cryptocurrency ETFs listing

Jan 20, 2018 Posted /  8218 Views

SEC put forth reasons for delay in Cryptocurrency ETFs listing

A staff letter from the US Securities and Exchange Commission (SEC) explains that there could be some obstacles in the approval process of exchange-traded funds (ETF) listing. The regulator has expressed additional concerns, which may lead to more delay. The director at SEC’s Division of Investment Management, Dalia Blass answered the two investment associations in a publicly issued letter on Wednesday.

Although the division has witnessed mounting interests from champions of mutual funds and ETFs that retain worth in cryptocurrencies, the letter pronounces that there are "significant investor protection issues that need to be examined before sponsors begin offering these funds to retail investors."

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According to Blass, their point of worry majorly concentrates on five domains: valuation, liquidity, custody, arbitrage and potential manipulation. As the letter explained, for instance, the SEC requires appraising on how a cryptocurrency-related ETF can be equitably priced provided the volatility of cryptocurrency prices, and amidst of technological developments such as blockchain forks.

Additionally, liquidity persistently is an added issue that tops the concerns and demands to be explored, in particular, how such innovative products can be retrieved by retail investors on a regular time frame.

The letter asserts:

"Until the questions identified above can be addressed satisfactorily, we do not believe that it is appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products, and we have asked sponsors that have registration statements filed for such products to withdraw them."

Blass' explanations arise subsequent to numerous contemporary filings with the SEC from firms endeavouring to list cryptocurrency-related ETFs. As reported by media outlets earlier this month, some of these filings had been immediately removed, with the companies involved citing the regulator's attention to valuation and liquidity.

In 2017 also the SEC declined a plea for a bitcoin-tied product recommended by well-known bitcoin contributors Cameron and Tyler Winklevoss.

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Tags: cryptocurrency cryptocurrency Exchange Cryptocurrency ETFs

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