EXCLUSIVE—The U.S. Securities and Exchange Commission, or SEC, has expressed serious reservations regarding bitcoin ETFs, in a public letter published on the regulator’s website yesterday.
The reservations come at a time when bitcoin has experienced a series of falls in value, just wobbling over its previously celebrated mark of $10,000. The currency is standing at $11,479 today, as of 10 AM ET, according to Coinbase.
In its letter, signed by Dalia Blass, director of investment management, the SEC points to “a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to retail investors,” citing numerous concerns around cryptocurrency valuation, liquidity, and arbitrage, among others.
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.
The SEC’s reservations on bitcoin ETFs come during a time when, as previously noted, bitcoin’s infamous volatility is rearing its head after a prolonged period of upward mobility for the currency.
Over the course of the last three days, bitcoin has lost, then regained, then lost again, about $30 billion in terms of market value as its price dipped below the $10,000 mark so long awaited by crypto enthusiasts.
While the currency seems to be moving upward again, bitcoin is still down nearly 4%, according to data from Coinbase, and as usual, other cryptocurrencies are following suit: ether, Bitcoin Cash, and Litecoin are all down, according to Coinbase.
In the SEC’s letter, Blass addresses this traditional concern with valuation when it comes to funds like ETFs, asking:
How would funds develop and implement policies and procedures to value, and in many cases “fair value,” cryptocurrency-related products?
How would funds’ accounting and valuation policies address the information related to significant events relevant to cryptocurrencies?
Take a look at the full letter here.
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