Time for a clearance? Market manipulation has to do with Loom large over Bitcoin ETF rejections




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(Photo by Yu Chun Christopher Wong / S3studio / Getty Images)

The Securities and Exchange Commission rejecting proposals for bitcoin exchange traded funds is officially the dogbites man & # 39; news story of the crypto community.

In the 18 months since the first strikedown of the bitcoin ETF proposal by Winklevoss in March 2017, the office's approach to the controversial retail investment vehicles has literally been streamlined.

Indeed, another cohort of nine ETF proposals was frankly rejected Wednesday, with the same reasoning and & nbsp; -language used for all rejections.

Perhaps the only aspect that was more remarkable than the shut-out itself was the extent to which almost no one in crypto actually expected them to be approved in the first place.

"It was largely clear that few people really expected these proposals to continue," commented Mati Greenspan, senior market analyst at eToro, and pointed out that crypto markets had largely offset the supposed rejections in the price of bitcoin.

What is the mystery?

The main reasons the SEC recommends for the latest rejections, as well as earlier ones, are that Bitcoin markets are still overly unmanipulated and prone to manipulation, making the popular cryptocurrency too risky for small investors to be overly exposed.

"The SEC actually says" not on our grass, "said James Angel, a finance professor at Georgetown University, adding:

"Their reasoning is that the exchanges must demonstrate that the underlying market for Bitcoin is not subject to fraud and manipulation, and that the exchanges have not met their burden of proof." Given the history of fraud, hacking and manipulation in the Bitcoin market, it makes sense. "

Angel also implied that the SEC is trying to assert its muscles in an area where other financial regulators may have been too lenient.

"It is also a slap in the face of the CFTC, CME and CBOE for allowing bitcoin futures, as the SEC implies that those futures exchanges are too vulnerable to fraud and manipulation," he explained.

Asaf Meir, founder and CEO of Solidus Labs, a start-up for building market surveillance solutions for crypto-native assets, agreed and argued that the complexity of assets such as bitcoin offers significant opportunities for smart and malicious actors to manipulate markets.

"The decisions of the SEC of the past few weeks reflect that concern and correspond to more and more reports on the enormous volume of manipulation in cryptoasset trading," he said, noting that the agency "repeatedly the lack of sufficient trade surveillance for these assets. "

Perhaps the most perplexing is the persistence shown by the bitcoin ETF proposers in the search for approvals, even though there was no significant shift in the robustness of these underlying markets.

"In the coming weeks, all entities behind different ETFs will resubmit the same ETF with zero changes: & # 39; It will be different this time & # 39 ;," the controversial crypto-expert Bitfinex & # 39; ed. joked on Twitter. & nbsp;

Broader concerns

Huhnsik Chung, a partner at Strook & amp; Strip & amp; Levan in New York, estimated that there are further regulatory issues within the US crypto-space that must be answered before bitcoin-based ETF products get through.

"(The SEC & # 39; s) rejection is probably partly due to the confluence of all global issues that have limited the growth of the digital asset segment, and in particular the size and volatility of the Bitcoin market," Chung explained. , arguing that the lack of clarity between the security and the token offering, the complex tax treatment and the lack of harmony in the rules governing bitcoin and other digital assets hamper the growth of the markets for offering initial currencies and thereby limiting bitcoin markets.

Chung added:

"Unless these problems are addressed, companies with digital assets will continue to go offshore in search of better regulation and legal certainty for this asset class."

Where now?

Nevertheless, many bitcoin enthusiasts see the ETF rejections as a plug in an uncertain dike when it comes to institutional players entering the market.

"I do not think (the rejections) are so important The physical & over-the-counter / institutional bitcoin infrastructure has only just begun," said Jonathan Hamel of Acadamie Bitcoin in Montreal. "The development of financial vehicles supported by bitcoin is inevitable, it is not like, it is when."

Meir, a Goldman Sachs alum that Solidus Labs, together with a number of former Goldman technicians from fintech, founded, argued that crypto markets should perform self-controls and self-regulation better to combat nefarious activities before an ETF can be made green:

"There are well-known forms of manipulation and fraud such as pumping and dumping and washing sales, but the cryptoasset industry must also take into account new potential crypto-specific forms of manipulation, and how we can look ahead."

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(Photo by Yu Chun Christopher Wong / S3studio / Getty Images)

The Securities and Exchange Commission rejecting proposals for bitcoin exchange traded funds is officially the dogbites man & # 39; news story of the crypto community.

In the 18 months since the first strikedown of the bitcoin ETF proposal by Winklevoss in March 2017, the office's approach to the controversial retail investment vehicles has literally been streamlined.

Indeed, another cohort of nine ETF proposals was rejected around Wednesday, with the agency using the same reasoning and language for all rejections.

Perhaps the only aspect that was more remarkable than the shut-out itself was the extent to which almost no one in crypto actually expected them to be approved in the first place.

"It was largely clear that few people really expected these proposals to continue," commented Mati Greenspan, senior market analyst at eToro, and pointed out that crypto markets had largely offset the supposed rejections in the price of bitcoin.

What is the mystery?

The main reasons the SEC recommends for the latest rejections, as well as earlier ones, are that Bitcoin markets are still overly unmanipulated and prone to manipulation, making the popular cryptocurrency too risky for small investors to be overly exposed.

"The SEC is actually saying" not on our premises, "said James Angel, a finance professor at Georgetown University, and added:

"Their reasoning is that the exchanges must demonstrate that the underlying market for Bitcoin is not subject to fraud and manipulation, and that the exchanges have not met their burden of proof." Given the history of fraud, hacking and manipulation in the Bitcoin market, it makes sense. "

Angel also implied that the SEC is trying to assert its muscles in an area where other financial regulators may have been too lenient.

"It is also a slap in the face of the CFTC, CME and CBOE for allowing bitcoin futures, as the SEC implies that those futures exchanges are too vulnerable to fraud and manipulation," he explained.

Asaf Meir, founder and CEO of Solidus Labs, a start-up for building market surveillance solutions for crypto-native assets, agreed and argued that the complexity of assets such as bitcoin offers significant opportunities for smart and malicious actors to manipulate markets.

"The decisions of the SEC of the past few weeks reflect that concern and correspond to more and more reports on the enormous volume of manipulation in cryptoasset trading," he said, noting that the agency "repeatedly the lack of sufficient trade surveillance for these assets. "

Perhaps the most perplexing is the persistence shown by the bitcoin ETF proposers in the search for approvals, even though there was no significant shift in the robustness of these underlying markets.

"In the coming weeks, all entities behind different ETFs will resubmit the same ETF with zero changes: & # 39; It will be different this time & # 39 ;," the controversial crypto-expert Bitfinex & # 39; ed. joked on Twitter.

Broader concerns

Huhnsik Chung, a partner at Strook & Strook & Levan in New York, calculated that there are further regulatory questions in the US crypto-space that must be answered before bitcoin-based ETF products attract attention.

"(The SEC & # 39; s) rejection is probably partly due to the confluence of all global issues that have limited the growth of the digital asset segment, and in particular the size and volatility of the Bitcoin market," Chung explained. , arguing that the lack of clarity between the security and the token offering, the complex tax treatment and the lack of harmony in the rules governing bitcoin and other digital assets hamper the growth of the markets for offering initial currencies and thereby limiting bitcoin markets.

Chung added:

"Unless these problems are addressed, companies with digital assets will continue to go offshore in search of better regulation and legal certainty for this asset class."

Where now?

Nevertheless, many bitcoin enthusiasts see the ETF rejections as a plug in an uncertain dike when it comes to institutional players entering the market.

"I do not think (the rejections) are so important The physical & over-the-counter / institutional bitcoin infrastructure has only just begun," said Jonathan Hamel of Acadamie Bitcoin in Montreal. "The development of financial vehicles supported by bitcoin is inevitable, it is not like, it is when."

Meir, a Goldman Sachs alum that Solidus Labs, together with a number of former Goldman technicians from fintech, founded, argued that crypto markets should perform self-controls and self-regulation better to combat nefarious activities before an ETF can be made green:

"There are well-known forms of manipulation and fraud such as pumping and dumping and washing sales, but the cryptoasset industry must also take into account new potential crypto-specific forms of manipulation, and how we can look ahead."


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