Bitcoin (BTC)–On Wednesday, word came down that the U.S. Securities and Exchange Commission (SEC) had denied 9 Bitcoin Exchange-Traded Fund proposals ahead of the original outlined deadline. While news of the SEC refusing to move forward with a Bitcoin ETF does hold weight for the future of the market, the organization was careful in its wording to state that it does not view the ruling as an indictment of Bitcoin or cryptocurrency in general,
“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.”
The movement by the SEC comes just weeks after denying a proposed BTC ETF by the Winkelvoss twins, who operate the cryptocurrency exchange Gemini. In addition, the SEC delayed its decision on the VanEck Bitcoin ETF bid until the end of September, leading to a possibility that a crypto exchange-traded fund could be eminent. Unlike the plans that were rejected en masse by the SEC, VanEck’s ETF model has been placed in the front-running for approval by many within the industry, signaling the possibility of a coming positive ruling. However, the market has been hinging upon the decision by the SEC, causing massive swings in valuation over the last three weeks in addition to an investment base that has stalled out while waiting on government regulation–an irony given the decentralized nature of crypto.
While those focused on the development side of cryptocurrency, from the co-founder of Ethereum to others with an interest in seeing adoption for crypto grow, the focus on getting an ETF passed has become more than a nuisance. Essentially, the industry of cryptocurrency has been boiled down to the whims of investors who are focused on nothing more long-term than day-trading. Price speculation has replaced conversations over adoption. The desire for Wall Street banks and institutional investors has crowded out the desire of creating digital money for the unbanked. Clamoring for greater government oversight and regulation has replaced the alternative that cryptocurrency represented for those disillusioned with fiat.
There are two ways to look at the ETF decision, and neither spells particularly well for the current state of the industry. The first is a lack of maturity in the markets, with a failure of self-regulation necessitating that the SEC steer clear in the interim. The more troubling idea is that cryptocurrency has become so focused on how to trade and invest in the currency, rather than why. Until cryptocurrency provides the average person with legitimate reasons to own and use the digital asset, conversations related to exchange-traded funds are unnecessary.
With the positive indication given by the SEC through the denial, that their rejection of the proposed ETF does not constitute a wider criticism of Bitcoin and blockchain, there is indication that the industry is moving in the right direction for acceptance as a digital asset. However, the endless focus on exchange-traded funds and getting crypto into the hands of Wall Street players is starting to erode any interest and excitement being built in the development of projects–creating a house of cards that will be highly speculative but low on intrinsic worth.