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For years, both brothers tried to set up a Bitcoin ETF – to no avail.
(Photo: AFP)
New York Where does Bitcoin control, and with it the many other cryptocurrences? Ratings, stories and anecdotes are available weekly from Handelsblatt's editors, Astrid Dörner, Felix Holtermann and Frank Wiebe, in our new cryptographic column "Coin & Co.". Today Part 25: What the crypto hype has in common with the rush of gold.
For over three years, Tyler and Cameron Winklevoss have been trying to launch a Bitcoin ETF. On Thursday, the founders of the New York Crypto Exchange failed again. The US Securities and Exchange Commission has also rejected a reformed initiative, with staggering arguments.
For twins, who are among the first Bitcoin billionaires, it's a big setback. For investors, however, the SEC's decision is good news. It is clear that the largest cryptocurrency per market value is still not as safe, as stable and free from manipulation as crypto-enthusiasts claim. This does not mean that there will never be a Bitcoin ETF. But for now it means: the crypto industry must continue to do its homework.
An important argument of the SEC: The risk of price manipulation in Bitcoin-Mart is still extremely high. The Winkevoss ETF was to be traded on the twin plans on the Chicago Stock Exchange CBOE. Thus, a large majority of investors should have access to cryptocurrency through a regulated trading platform, without having to own Bitcoin.
But if the already volatile Bitcoinpreis of a handful of players is pushed up or down, even an ETF can not protect its shareholders. All attempts by the Winklevoss and CBOE twins to quell the SEC are "incomplete, contradictory and unsatisfied," the SEC says in its 92-page decision.
The price of bitcoin can be manipulated
It was only in May that a report from the Bloombeg News Agency caused a sensation, according to which the Ministry of US Justice reportedly investigated bitcoin manipulations and opened criminal investigations. In addition, the SEC cites a scientific study according to which the Bitcoin price could have been manipulated via cryptocurrency attachment.
Again and again, manipulations in the world of the crypt are discussed. The so-called "pump-and-dump" actions have been tolerated for a long time. The industry and the founders of Gemini are now suffering that the climate of the Wild West has been tolerated for far too long and that the industry has not managed to self-regulate.
Another problem, which has not yet been sufficiently clarified: where and how are bitcoins subject to the ETF stored? Unlike Bitcoin futures traded on the Chicago CBOE and CME exchanges since December, the ETF must be hedged by the underlying badet.
The question of storage is therefore extremely important. Exchanges of crypto all over the world are hacked again and again, are overloaded and temporarily unavailable. This has frightened investors, called regulators on the scene and is one of the reasons why institutional investors up to now with cryptographic investments hold back. Although a whole range of suppliers are working on a solution. But the – also shows the decision of the SEC – is not yet mature yet.
The mission of Tyler and Cameron Winklevoss and other Bitcoin ETF providers that also require SEC approval is commendable. Investing directly in cryptocurrencies is heavy. And anyone who loses his pbadwords or risks leaving his laptop, the holder of digital currencies, never sees his money again.
An ETF would therefore be comfortable and would give retail investors less tech savvy the opportunity to bet on cryptocurrencies. But all this applies only if the products intended for small investors remain stable. Rigor is more important here than speed.
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