The US Securities and Exchange Commission (SEC) is right about their decision to reject bitcoin exchange-traded funds, believes Jake Chervinsky of San Francisco-based Compound Finance.
The general counsel on Thursday said the US securities regulator has valid concerns about bitcoin’s price volatility. He referred to the cryptocurrency’s latest price drop, wherein it plunged by as much as 20 percent in the matter of a few days. Chervinsky cited reports that showed how unregulated cryptocurrency exchanges operating outside the US played a crucial role in crashing bitcoin. It is the same concern that made the SEC hesitant to allow an ETF focused on a mostly unregulated Bitcoin market to make its way to the public.
“Bitcoin drops 20% over a few days; there’s no simple explanation for why; the drop made big money for offshore unregulated margin trading platforms; trading on those same platforms might’ve caused the drop in the first place; you’re still wondering why the SEC has concerns?” – noted Chervinsky.
Too Risky
ETFs are investment vehicles that track the performance of particular assets. It allows investors to diversify their investments without needing to own the asset. A Bitcoin ETF, therefore, will enable investors to speculate on the bitcoin price without needing to go through the complicated process of storing and managing the cryptocurrency physically.
To the crypto world, a Bitcoin ETF is good news since it adds a more accustomed, regulated layer atop the cryptocurrency market. That could bring more investors – both retail and institutional – to the bitcoin market, which could make them a crypto holder.
The post Latest Bitcoin Drop Proves SEC’s ETF Concerns: Chervinsky appeared first on NewsBTC.
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