Private Bank Kleinwort Hambros Launches Blockchain Exchange-Traded Note

Private Bank Kleinwort Hambros Launches Blockchain Exchange-Traded Note

            

Private bank Kleinwort Hambros launched an exchange-traded note (ETN)

made up of blockchain-related companies, financial news outlet Finextra reported on April 8. Kleinwort Hambros is owned by Societe Generale, acting as their private wealth management division in the United Kingdom. Societe Generale itself is a multinational investment bank headquartered in Paris, with total assets of around 1.3 trillion euros ($1.4 trillion) in 2018. Per the report, the new derivative is available for a minimum investment of £1,000 (equivalent to about $1,300) and has been listed in Luxemburg. The stocks reportedly include 20 companies which are expected to profit from blockchain and distributed ledger technology (DLT) adoption.

More precisely, the companies are expected to earn revenue through the sale of relevant software and services or improve their profit margins with the adoption of decentralized technologies. The companies that make up the ETN reportedly come from the technology, shipping, oil and gas, custody banking and industrials industries. The press release quotes John Birdwood, portfolio manager at Kleinwort Hambros, as stating that the bank noticed increasing interest on their clients’ part towards blockchain, prompting the development of the product.

Kleinwort Hambros, according to a report released by the company in March 2018, has £16.3 billion of assets (around $21 billion) under management, over a thousand employees, and offices in London, Cambridge, Newbury, Leeds, Edinburgh, Guernsey, Jersey and Gibraltar.

As Cointelegraph reported in January, Ed Tilly, CEO, president and chairman at the Chicago Board Options Exchange, declared that there is a need for Bitcoin (BTC) exchange-traded notes in order for Wall Street institutional investors to join the crypto space. At the end of March, the United States Securities and Exchange Commission has delayed its decision on a rule change to the Securities Act that would allow the listing of Bitcoin exchange-traded funds (ETF).

Article Produced By
Adrian Zmudzinski

Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.

https://cointelegraph.com/news/private-bank-kleinwort-hambros-launches-blockchain-exchange-traded-note

Lithuanian Finance Ministry to Introduce Legal Amendments for Crypto-Related Firms

Lithuanian Finance Ministry to Introduce Legal Amendments for Crypto-Related Firms

             

The Republic of Lithuania’s Ministry of Finance plans

to release legal amendments for operating crypto-related businesses in the country, Riga-based newspaper The Baltic Times reports on April 8. According to the report, the Lithuanian finance ministry wants to bring more legal certainty to the operation of companies relating to cryptocurrency exchanges, crypto wallet operators, as well as initial coin offerings (ICOs).

By enforcing legal requirements in the industry, the authority reportedly seeks to ensure an efficient policy against money laundering and terrorism financing, as well as to guarantee a due level of consumer protection, the articles writes. The new amendments propose that crypto-related companies will have to be registered with the Center of Registers in order to operate as legal entities. The companies will also have to execute the Law on the Prevention of Money Laundering and Terrorist Financing, as well as to strictly observe Know Your Customer (KYC) laws including reporting high volume financial transactions to the Financial Crime Investigation Service (FCIS).

As The Baltic Times reports, operators are set to be required to identify users and check their identity prior to providing services if the operation value exceeds 1,000 euros ($1,120). Sigitas Mitkus, director of the finance ministry's financial market policy department, said that introducing limits for financial operations will be a new practice under the European Union directive. According to Mitkus, Lithuania might become the first country in the world to implement recommendations of the Financial Action Task Force (FATF) and apply requirements not only in terms of crypto-to-fiat conversion, but also in terms of internal crypto trading, the report notes.

Earlier this year, the Bank of Lithuania released an updated document on its official stance to cryptocurrencies and ICOs, claiming that financial market participants are still authorized to receive payments only in traditional fiat currencies, and prohibited to get paid in crypto. In early March, the FATF published preliminary guidelines for cryptocurrencies, urging countries to prevent money laundering and terrorism financing, as well as to introduce crypto-related licensing and setting up KYC processes.

Article Produced By
Helen Partz

Helen is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2017, she joined Cointelegraph as a writer.

https://cointelegraph.com/news/lithuanian-finance-ministry-to-introduce-legal-amendments-for-crypto-related-firms

Hong Kong: Illicit Crypto Mining Operations Are Punishable by Fine or Imprisonment

Hong Kong: Illicit Crypto Mining Operations Are Punishable by Fine or Imprisonment

            

The secretary of Hong Kong’s Financial Services and the Treasury

has stated that crypto mining operations are regulated by local trading law. His written response to Hong Kong’s Legislative Council was published on Wednesday, April 3. The Council has solicited information about the risks and fraudulent activities related to cryptocurrencies and underlying activity, such as mining. Moreover, the officials are interested whether mining is regulated under the Trade Descriptions Ordinance (TDO) — a bill passed in 2012 that prescribes penalties for unfair trading practices in Hong Kong.

Secretary James Lau has responded that the sale of mining equipment and any other products related to virtual assets falls under the TDO. The unfair practices he mentions in this regard include false trade descriptions, misleading omissions, aggressive commercial practices and wrongly accepting payment, among others. According to Lau, illicit mining activity can thus be subject to a $500,000 fine or five years in prison.

The secretary also mentions a particular fraud case, when Hong Kong police arrested three persons that allegedly lured 20 victims into investing over HK$3.7 million (around $471,400) in crypto-related equipment and services. As Cointelegraph previously reported, a similar amount of funds — HK$3 million ($383,000) — was mentioned in a criminal case involving a purported Bitcoin millionaire (BTC) Wong Ching-kit. The 25-year-old businessman and his 20-year-old-colleague were arrested at their office in Hong Kong for conspiracy to defraud 20 investors by selling them mining machines.

Wong Ching-kit is wide known for a publicity stunt in Hong Kong’s relatively poor district Sham Shui Po in December 2018. The entrepreneur appeared in a video posted on his firm Epoch’s Facebook page, asking whether anyone believed that money could fall from the sky. Immediately after his question, stacks of bank notes reportedly amounting to HK$6,000 ($764) were thrown from a nearby rooftop. Following an incident, Wong was arrested on suspicion of disorderly conduct in public, but later released on bail.

Article Produced By
Ana Berman

Moved by her interest to discover the world of decentralized technologies, Ana joined Cointelegraph in June 2018. Shortly after joining the team as a news writer, she focused on the major crypto stories from Latin America

https://cointelegraph.com/news/hong-kong-illicit-crypto-mining-operations-are-punishable-by-fine-or-imprisonment

Thai, Myanmar Central Bank Governors Endorse Blockchain Remittance Service

Thai, Myanmar Central Bank Governors Endorse Blockchain Remittance Service

             

The governors of two central banks endorsed the Ethereum (ETH)-based

remittance system developed by blockchain company Everex, the firm reported in a press release shared with Cointelegraph today, April 5. The service is set up to send payments between Thailand and Myanmar. The system was reportedly presented by the startup, along with its partners, state-owned Krungthai Bank of Thailand and Shwe Bank of Myanmar, at the Association of Southeast Asian Nations (ASEAN) central bank governors and finance ministers meeting on April 4. The Everex press release cites Veerathai Santiprabhob, the governor of Thailand’s Central Bank, as commenting on the

project:

“This project is an important step forward for the more than 3 million workers in Thailand who might have so far used not secured channels.”

The governor of the central bank of Myanmar, U Kyaw Kyaw Maung, also made a statement about the initiative during the meeting, quoted in the press release as

saying:

“Both countries share a common culture and traditions. Those bring countries and people together the same way as Krungthai and Shwe bank cross border remittance money transfer service. Transactions will be faster and more secure.”

The release also notes that the company received a letter of approval from the Bank of Thailand, the country’s central bank, to launch its service as requested by the involved parties. A tweet from Everex yesterday also includes a link to a press release from Thailand’s central bank that details the agenda for the ASEAN meeting and describes Everex’s product.

According Everex’s press release, on March 28, Krungthai Bank signed a Letter of Intent to introduce its cross-border money transfer service between Thailand and Myanmar. Per the release, over three million Myanmar migrant workers reside and work in Thailand and every month send part of their income to Myanmar.

Moreover, the service based on Everex’s system, dubbed “Krungthai Bank and Shwe Bank Remittance powered by Everex,” allows users to make money transfers via a smartphone at any time. As Cointelegraph reported last week, India’s Federal Bank, a commercial private bank, has partnered with Ripple to use its network for cross-border remittances. In the Middle East, the United Arab Emirates’ central bank and the Saudi Arabian Monetary Authority announced in January that they are developing their own interbank digital currency, which will be called “Aber.”

Article Produced By
Adrian Zmudzinski

Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.

https://cointelegraph.com/news/thai-myanmar-central-bank-governors-endorse-blockchain-remittance-service

Blockchain Mortgage Tech Startup Acre Software Raises $6.5 Mln From UK Financial Advisor

Blockchain Mortgage Tech Startup Acre Software Raises $6.5 Mln From UK Financial Advisor

            

United Kingdom startup Acre Software raised about $6.5 million

to apply blockchain technology to the mortgage and insurance application process for advisers, a press release published on April 4 states. Per the release, nearly three-quarters of UK mortgages are facilitated by advisers, and the company aims to help them retain their position by matching the speed of an end-user service. Acre reportedly uses blockchain to store all the data about mortgage advice immutably.

The investment reportedly comes from UK financial adviser Sesame Bankhall Group (SBG), which, according to the release, has more than 11,000 advisers in the country. Owler estimates the annual revenue of the advisory firm to be around $4.5 million. Moreover, the release also claims that SBG closed an exclusive deal with the startup, the details of which were not disclosed.

As Cointelegraph reported in October last year, mortgages are seemingly a target for modernization and decentralization through the application of blockchain technology. Big Four auditing firm PWC claimed in a report that blockchain “technology could remove cost and friction from the process, create transaction records that are infallible and incorruptible, and facilitate near-instantaneous settlement.” More recently, in March, Swiss mortgage bank Hypothekarbank (“Hypi”) Lenzburg partnered with Swiss crypto asset manager TokenSuisse to expand the bank’s service offerings for crypto and blockchain firms.

Article Produced By
Adrian Zmudzinski

Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.

https://cointelegraph.com/news/blockchain-mortgage-tech-startup-acre-software-raises-65-mln-from-uk-financial-advisor

Coinbase CEO Names Three Things Crypto Needs for Mass Adoption

Coinbase CEO Names Three Things Crypto Needs for Mass Adoption

           

Brian Armstrong, CEO of major United States cryptocurrency exchange Coinbase,

believes that crypto mass adoption mostly depends on volatility, scalability and usability. Armstrong made his claim during a live ask-me-anything (AMA) session on April 2. Armstrong ran the 45-minute AMA on Tuesday, answering selected questions submitted by the crypto community. Addressing the first question, on the potential for mass crypto adoption, Coinbase’s CEO said that a cryptocurrency can achieve mass adoption by improving scalability and usability, while reducing volatility. As per volatility, if the crypto markets keep swinging dramatically, it will be hard to get more traditional investors involved, Armstrong said. Thus the industry needs more stable prices, achieved, for example, via stablecoins, and more use cases to attract people, he concluded.

Armstrong further added that there are currently up to ten teams working on scalability solutions, such as the Lightning Network, to improve the speed of crypto transactions. Thanks to the development of these solutions, cryptocurrencies might reach 500 to 5000 transactions per second and start working at Visa and PayPal volumes. Usability also needs to be improved, Armstrong continued. He argued that currently there are too many steps a user needs to make in order to invest in cryptocurrencies. Armstrong suggested crypto investment for retail investors should work much easily, using popular Chinese app WeChat as an example of usability.

Armstrong also commented on recent skepticism towards Coinbase in the community, evidently referring to the most recent #DeleteCoinbase movement as an example. The campaign was launched in early March as a response to Coinbase’s acquisition of a firm run by former spyware developers. Answering another question, the entrepreneur said he loves Bitcoin (BTC) and wants it to succeed. However, he regrets being too involved in promoting BTC at some point in 2013-2014, thinking that the coin could become a scalable payment network for everyone. “I totally underestimated how controversial this idea might become in BTC community,” he confessed.

As some accused him of adding the value to the coin, Armstrong finally changed his mind to being agnostic to all of the coins and crypto protocols and support them all. Coinbase decided to support everyone instead of picking the winners, he said. As Cointelegraph previously reported, Armstrong has repeatedly acknowledged his affection towards BTC. For instance, in a series of tweets commemorating on the coin’s 10th birthday this year, Armstrong wrote that BTC was his “first love.”

Article Produced By
Ana Berman

Moved by her interest to discover the world of decentralized technologies, Ana joined Cointelegraph in June 2018. Shortly after joining the team as a news writer, she focused on the major crypto stories from Latin America

https://cointelegraph.com/news/coinbase-ceo-names-three-things-crypto-needs-for-mass-adoption

Coinbase Makes LinkedIn’s ‘Top Companies 2019′ List as Lone Crypto Firm

Coinbase Makes LinkedIn’s ‘Top Companies 2019’ List as Lone Crypto Firm

           

United States cryptocurrency exchange Coinbase

has become the only cryptocurrency business to make it into LinkedIn’s list of the most popular companies for 2019, results confirmed on April 3. The yearly rundown, which ranks company popularity among employees, placed Coinbase at 35 out of a total of 50 shortlisted.

LinkedIn ranks contenders according to interest in the company, employee engagement by executives, demand for available jobs and employee retention rate. Different lists are issued for different countries, with Coinbase correspondingly appearing in the U.S. edition. The exchange has previously made it onto LinkedIn lists, such as in September last year, when it appeared in a rundown of the top 50 startups to work for, alongside payment network Ripple and fellow trading platform Gemini, the product of Tyler and Cameron Winklevoss. The latest data contains some surprises — Coinbase beat out famously crypto-skeptical JPMorgan Chase, which only attained 44th position.

Twitter and Intel also failed to top Coinbase. The former has recently shown an increasingly pro-crypto stance and the latter has engaged in mining hardware activities as of last year. For its part, JPMorgan CHas has also begun experimenting with cryptocurrency technology, Cointelegraph reporting last month on the unexpected release of its controversial in-house token, JPM Coin. Earlier this week, Coinbase revealed it had insurance against its hot wallet cryptocurrency holdings valued at $225 million. The company also recently launched its latest service, focused on staking for institutional investors, via its Coinbase Custody spin-off.

Article Produced By
William Suberg

William Suberg got into Bitcoin while completing his Masters degree and hasn't looked back since, writing about anything crypto-related which makes him sit up and pay attention. He started working with Cointelegraph in October 2013.

https://cointelegraph.com/news/coinbase-makes-linkedins-top-companies-2019-list-as-lone-crypto-firm

 

Montana County Adopts Regulation Requiring Crypto Miners to Use Renewable Energy

Montana County Adopts Regulation Requiring Crypto Miners to Use Renewable Energy

            

The United States county of Missoula, in the state of Montana,

has adopted regulation for cryptocurrency mining, local media outlet the Missoulian reports on April 5. Per the report, the Missoula County Board of Commissioners voted unanimously to impose new rules for local cryptocurrency mining operations. As Cointelegraph reported last month, when the regulation was first proposed, the draft of the rules stated that they aim “to protect the public health, safety, morals, and general welfare of county residents.” The focus of the new law is seemingly on the possible effects of cryptocurrency mining on global warming and electronic waste. Also, from now on, crypto miners in the county will be able to establish their operations only in light industrial and heavy industrial districts and only after they have been reviewed and approved as a conditional use.

Miners will also need to provide certification that all electronic waste generated will be handled by a Department of Environmental Quality-licensed recycling firm. Another new rule established in the county requires miners to use exclusively renewable energy. Lastly, preexisting mining operations that aren’t compliant will be allowed to continue but won’t be authorized for expansion if they don’t conform with the new regulations. The draft specified that the rules will be effective as of April 4, 2019 and until April 3, 2020.

The Missoulian notes that the county’s staff claim mining company Hyperblock currently uses as much electricity as one-third of all homes in the county and plans to triple its power usage. Hyperblock reportedly purchases hydroelectric power to fuel its endeavors, but the commissioners reportedly argued that it displaces other potential renewable energy buyers. County commissioner Dave Strohmaier purportedly

commented:

“Near as I can tell cryptocurrency is using exponentially more energy; it’s a grotesque amount of energy and we’ve got to take steps to address it. […] We’ve got to utilize new renewables if we’re going to address climate change.”

Hyperblock manager Dan Stivers defends the company by stating that it has always used only renewable energy and that it could have used electricity obtained by burning coal since it was cheaper. Stivers also claims that Hyperblock uses a licensed recycler to deal with its electronic waste,

adding:

“Somehow none of that’s enough. It is a viable business model and if we had not moved in as anchor tenants, there would be no Bonner mill as we see it today.”

According to the Missoulian, a lawyer for the company hinted that it may file a lawsuit over the regulation in the future. As Cointelegraph reported earlier today, the secretary of Hong Kong’s Financial Services and the Treasury has stated that crypto mining operations are regulated by local trading law.

Article Produced By
Adrian Zmudzinski

Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.

https://cointelegraph.com/news/montana-county-adopts-regulation-requiring-crypto-miners-to-use-renewable-energy

Blockchain Software Firm Digital Asset Open Sources its DAML Language

Blockchain Software Firm Digital Asset Open Sources its DAML Language

             

Blockchain software firm Digital Asset has open sourced

its Digital Asset Modeling Language (DAML), the company announced on Twitter on April 4. Introduced in April 2016, DAML is an expressive language designed for financial institutions to model and execute agreements through distributed ledger technology (DLT). According to Digital Asset’s blog, DAML is similar to a smart contract language in many ways, but it is optimized for usage in a private execution environment rather than in an open execution environment.

Staring now, the source code for the DAML language is freely available under the Apache 2.0 open source license, the company wrote in an announcement, adding that third parties are able to modify DAML and integrate it with other platforms. Shaul Kfir, co-founder and CTO at Digital Asset, said that DAML is capable of abstracting the underlying complexities of blockchains, which allows developers to rapidly write secure distributed applications regardless of the platform.

Along with the announcement, Digital Asset also released the open availability of the DAML software development kit (SDK) Developer Preview, allowing any developer to start using DAML today. According to the press release, the DAML SDK was previously available as part of a private beta developer program that provided early access to developers at a number of major global financial firms such as Accenture, the Australian Securities Exchange, BNP Paribas, Hong Kong Exchanges and Clearing, Singapore Exchange, Nomura Research Institute and others.

The Australian Securities Exchange had announced in September of last year that it was delaying its switch to blockchain for equity transactions by six months. Recently, Cointelegraph reported that Ethereum (ETH) has the most developers working on its base protocol of all cryptocurrencies, without counting community project developers. The company reportedly fingerprinted over 20,000 code repositories and 16 million commits to obtain data, which reveals that on average 216 developers contribute code to ETH repositories every month.

Article Produced By
Helen Partz

Helen is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2017, she joined Cointelegraph as a writer.

https://cointelegraph.com/news/blockchain-software-firm-digital-asset-open-sources-its-daml-language

 

A Brief History of the SEC’s Reviews of Bitcoin ETF Proposals

A Brief History of the SEC’s Reviews of Bitcoin ETF Proposals

           

It may span only a couple of years, but the history of Bitcoin exchange-traded funds (ETFs)

and the United States Securities and Exchange Commission (SEC) is already a long one. Back in March 2017, the SEC rejected the application for a Bitcoin ETF put forward by the Winklevoss twins, claiming that the underlying Bitcoin market was still too manipulable, volatile and resistant to surveillance. Fast forward to March 2019 and the SEC has still yet to approve a single Bitcoin ETF, with the comments to its latest public consultation remaining largely negative.

Such an absence of major progress may seem fatally discouraging to casual observers hoping for an ETF to provide crypto with added legitimacy. Nonetheless, the intervening period between March 2017 and the present day has witnessed a softening of the SEC's stance, with members of the commission even going so far as declaring that they expect a Bitcoin ETF to be approved sooner or later. There is, then, plenty of reason to draw hope from the SEC's recent dealings with Bitcoin ETF applicants, even if the longer-term history shows that the commission hasn't always adopted a favorable stance toward crypto.

2017: SEC claims manipulability, volatility and absence of surveillance

On June 30, 2016, the Bats BZX Exchange filed a proposed rule change with the SEC, which would have permitted it to list and trade shares of the Winklevoss Bitcoin Trust. If approved, the Winklevoss' ETF would have been the first Bitcoin exchange-traded fund licensed to appear on a fully regulated stock exchange, thereby making it possible for the layperson to gain exposure to Bitcoin without having to actually own the cryptocurrency or wrestle with crypto exchanges or wallets. No doubt this would have represented a big step toward the mainstream for crypto, yet after a long period of deliberation and consultation, the SEC rejected the proposed rule change. On March 10, 2017, it released a statement explaining the reasoning behind its decision, with the difficulty of preventing manipulation and fraud being at the

top of its list.

"Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated. Therefore, as the Exchange has not entered into, and would currently be unable to enter into, the type of surveillance-sharing agreement that has been in place with respect to all previously approved commodity-trust ETPs agreements that help address concerns about the potential for fraudulent or manipulative acts and practices in this market — the Commission does not find the proposed rule change to be consistent with the Exchange Act."

Barely two weeks after this judgment had been published, the SEC denied a similar proposal submitted by NYSE Arca, which is owned by the Intercontinental Exchange and which wanted to list the SolidX Bitcoin Trust ETF. Reusing many of the same phrases and declarations, the commission wrote on March 28 that "it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices."

As the two episodes above imply, 2017 wasn't a particularly great year for Bitcoin ETFs or for the notion that the SEC might be inclined to license one of them — because, aside from SolidX and Winklevoss, an ETF from Barry Silbert's Grayscale Investments was registered with the the SEC in January 2017, and it fared no better than its rivals. It was subject to a delay on March 22, after it had received three comments — all negative — from members of the public, and then in September of the same year, it withdrew its application, citing a lack of "regulatory developments" in the crypto market as the main reason for this action.

Between March and September, the public sent the SEC additional comments as part of the consultation, and while they ended up numbering only 21 in total, a portion of them provide insight into why Grayscale Investments wasn't likely to gain approval for its ETF at that time.

For example, a seven-page letter from Mark T. Williams, a finance professor at Boston University, details a long list of reasons as to why a Bitcoin ETF — particularly from Grayscale Investments — wasn't appropriate. These include Bitcoin market flaws, such as "poor price discovery, irregular trade execution, shallow trade volume, hoarding, relatively low liquidity, hyperprice volatility, a global web of unregulated bucket-shop exchanges, high bankruptcy risk and oversized exposure to trading and price discovery in countries outside the jurisdiction of the SEC." Yet, Williams also noted that Digital Currency Group — which owns Grayscale Investments and Coindesk (among other ventures) — "is fraught with inherent conflicts of interest."

But while this would suggest that there was some strong opposition to this particular ETF, other researchers outside the cryptocurrency industry were more positive. "Moving bitcoin trading activity to regulated US exchanges will improve price discovery and reduce the potential for manipulation and money laundering," argued James J. Angel, an associate professor of finance at Georgetown University.

Likewise, professor Campbell R. Harvey of Duke University (and colleagues) wrote that "allowing the Bitcoin Investment Trust to list its shares on the NYSE Arca as a bona fide Exchange-Traded Product (‘ETP’) would demonstrate the Commission’s utmost commitment to achieving" its aims of protecting investors, maintaining efficient markets and aiding capital formation. Given that six other economists from six other American universities signed this statement, it revealed that there was actually considerable support for the idea of a Bitcoin ETF, even if the SEC couldn't be disabused of its view that the cryptocurrency market was still too anarchic for it to approve such a fund.

2018: Growing support from the wider industry

As 2017 came to close, there was then a very real sense that the SEC viewed the Bitcoin market with suspicion, and that its sceptical views on the market were reinforced by a significant chunk of the comments it had received from people outside of the crypto industry. However, this unfavorable situation began to change gradually over the course of 2018, because, even though the SEC continued to reject Bitcoin ETFs, dissenting voices from within the commission began emerging.

This was most in evidence in July, when the SEC rejected — for a second time — the Winklevoss Bitcoin Trust proposed for listing by the Bats BZX Exchange. Once again, it judged that Bats' proposal failed to demonstrate that it was consistent with rules "designed to prevent fraudulent and manipulative acts and practices." However, it took the unusual step of adding a disclaimer to this rejection, writing, "Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment." Even more significantly, Hester Peirce (now dubbed “Bitcoin Mom” by the community) dissented from this decision, despite being a commissioner at the SEC. On July 27,

she wrote:

"The disapproval order focuses on the characteristics of the spot market for bitcoin, rather than on the ability of BZX — pursuant to its own rules — to surveil trading of and to deter manipulation in the ETP shares listed and traded on BZX."

This open dissent from an SEC commissioner indicated a subtle turning of the tide in favor of Bitcoin ETFs. And while one of the comments submitted during the brief SEC consultation in May was trenchantly hostile to the Winklevoss ETF, most were supportive. More importantly, the supportive letters and comments didn't always come from people working directly within the crypto industry, with four companies operating within the global exchange-traded products market providing key testimony in favor.

For example, C&C Trading concluded in its comment that it "supports listing the COIN ETF and believes it will be an innovative product for investors and market professionals to trade," with the ETF market-making specialist also adding that many existing ETFs "are based on opaque and illiquid underlying instruments." Still, despite the fact that wider industry and public opinion was in general warming to the idea of Bitcoin ETFs, 2018 unsurprisingly set the record for the number of proposals dismissed by the SEC. On Aug. 22 alone, the commission rejected nine applications, with the likes of Direxion, ProShares and GraniteShares having their applications turned down (and in some cases, more than one application). And once again, the SEC explained these rejections mostly in terms of a failure to prove that the applicants' rules were "designed to prevent fraudulent and manipulative acts and practices."

The fact that the commission remained fixed to this point of view shouldn't be surprising, not least because this decision followed soon after the publication of fairly damning research into crypto-market manipulation. In June, University of Texas researchers released a paper concluding that Tether and Bitfinex manipulation was responsible for around 50 percent of Bitcoin's price rises in 2017. Barely a month before, the U.S. Department of Justice had opened a criminal investigation into Bitcoin price manipulation, while, at the beginning of August, the Wall Street Journal published a study that found that price manipulation was mostly being perpetrated by “trading groups” using Telegram and other messaging services.

2019: Increased hope despite decreased momentum

In light of all this negative publicity, it's unsurprising that the SEC continues to refuse the approval of a Bitcoin ETF. And while nothing has essentially changed in 2019 (and no ETF has so far been approved), there is once again increased cause for hope. In February, Robert J. Jackson Jr. – a commissioner with the SEC – went on record as saying that he expects the commission to license a Bitcoin ETF

sooner or later.

“Eventually, do I think someone will satisfy the standards we’ve laid out there? I hope so, yes, and I think so.”

That same month, a commissioner with the Commodities and Futures Trading Commission (CFTC) criticized the SEC for having rejected previous ETFs on the grounds of potential price manipulation. Speaking at the BiPartisan Policy Center in Washington D.C.,

Brian Quintenz said:

"There are mathematical ways through a settlement index to design a contract where even if there isn’t a lot of liquidity on one exchange referenced, the index itself is not readily susceptible to manipulation."

Added to Hester Peirce's continued support for the crypto industry, such remarks indicate a climate in which the SEC is becoming incrementally more receptive to the idea of a Bitcoin ETF, despite Peirce’s warning in December 2018 that an approval could take longer than some people would hope. Indeed, an approval could take some time, since the prognoses for the ETFs currently under review don't look especially encouraging. In February, Reality Shares withdrew its own ETF trust after the SEC had encouraged it to do so, largely because the ETF took the unusual step of combining Bitcoin futures, sovereign debt instruments and money market mutual funds into a single derivative. And while there has been some hope in the Chicago Board Options Exchange's (CBOE) reapplication for a Bitcoin ETF, this has been dampened by the public's largely negative response to the application.

Of the 18 comments submitted to date (between Feb. 13 and March 31), only three were in favor of the ETF. However, it would be extremely rash to conclude on the basis of 15 disapproving comments that the general public or the wider financial industry are growing increasingly weary of the idea of a Bitcoin ETF. That's because some of these comments lack any real credibility, being either extremely minimal at best or downright incoherent at worst. As for the other, even though they generally argue their points with more depth and rigor, they're all from repeat commentators. The two contributions of a one “Sam Ahn” are his eighth and ninth, for instance, while "investment professional" Jonathan Harris has sent at least two very similar letters containing general Bitcoin-scepticism, as well as one from April 2017.

This reappearance of entrenched critics undermines any suspicion that opposition to a Bitcoin ETF somehow might be growing. However, by much the same token, it's discouraging to note that there aren't really any significant contributions to the consultation on CBOE's latest application. While it's hard to conclude anything on the basis of a single proposal, this might indicate that the push for an ETF is losing some momentum — or, at least, publicity. At the very least, interest from the wider public and from industries outside of crypto may be waning, even though the cryptocurrency industry remains firmly behind the idea.

And even if interest is waning, this is likely due to a recognition that it isn't letters from the public that will now sway the SEC, but actual evolution in the maturation and regulation of the cryptocurrency industry. And because there have been multiple developments on this front — from the United States to Russia and Japan — it's likely only a matter of time before the SEC approves its first Bitcoin ETF.

Article Produced By
Simon Chandler

Simon Chandler is a journalist based in Hove, UK. He writes mostly about technology, with his specialties including cryptocurrencies, AI, VR, and social media. He also occasionally writes about politics, culture and music, and has contributed to the likes of Wired, the Daily Dot, the Verge, Computer Weekly, Techcrunch, Bandcamp Daily, the New Internationalist, the Kenyon Review, and Tiny Mix Tapes

https://cointelegraph.com/news/a-brief-history-of-the-secs-reviews-of-bitcoin-etf-proposals