Critique of Bitcoin ETF Requests
Bitcoin (BTC) has been catching its breath for a while now after it skyrocketed earlier. It has been hovering just above $30,000 for over a week now, but today it surged above $31,000. While all eyes were on a new annual high, the price suddenly fell below the important level of $30,000. This price drop has to do with a prevailing fear about the fate of a possible spot Exchange Traded Fund (ETF) for bitcoin.
The SEC’s Concerns on ETF Filings
Bitcoin price volatility kicked in after a Wall Street Journal (WSJ) article revealed that the SEC has said the surge in bitcoin ETFs may be inadequate. According to the article, the SEC believes that the ETF filings have not been specific enough about the so-called ‘surveillance-sharing agreement’.
The Role of the Surveillance-Sharing Agreement
This agreement is intended to discourage fraud and manipulation. This gives the exchange on which the ETF is traded the right to request all information regarding the activity of investors in the fund. In the past, the SEC has often cited the risk of market manipulation as a reason to reject the applications.
The WSJ stated that “the SEC told exchanges it was returning the applications because they did not name the mock bitcoin exchange with which they were expected to have a surveillance-sharing agreement or provide sufficient information on the details of these arrangements.”
“Excessive” BTC Drop
After the WSJ news article was published, the price of bitcoin fell to a low of $29,500. However, many analysts are calling the price action “exaggerated” as the news is not as negative as many people initially think. Many assumed that the financial regulator had dismissed the explosion of ETF applications straight to the trash.
Eric Balchunas, senior ETF analyst at Bloomberg, responded to the news by clarifying that the SEC only wants the filings to specify the crypto exchange and release more details about the aforementioned agreement, which is designed to prevent market manipulation.
“Hold up a second, this isn’t as bad as the headline. The key paragraph is deep in the story. Basically SEC wants them to name the crypto exchange and give more details on the Surveillance-Sharing Agreement (SSA). That’s understandable, arguably good news. I was under the impression they’d have to update that as well.” – Eric Balchunas (@EricBalchunas)
He describes it as “understandable and perhaps good news.” Popular bitcoin analyst Will Clemente also commented on Twitter that the news only concerns a technical detail that is easy to adjust.
Market Response and Future Outlook
At the time of writing, the market seems to be recognizing that the news is not as bad as the first glance suggests. The bitcoin price has risen again to a current price of $30,650.