The Securities and Exchange Commission (SEC) is in a dilemma about providing approvals on Bitcoin ETF according to a Bloomberg report. Also, they do not have the authority to regulate these exchanges, because SEC regulates exchanges that trade securities, unlike Bitcoin.
Bitcoin ETFs are exchange-traded funds that trace the value of Bitcoin and trade on traditional market exchanges rather than cryptocurrency exchanges. It also allows investors to invest in bitcoin without going through the hassle of using a cryptocurrency exchange. Bitcoin ETF provides an alternative approach for retail investors to invest in cryptocurrency. With the help of ETF investors can invest in cryptocurrencies without purchasing them and compromising with their complexity.
SEC could provide approvals on Bitcoin ETF to improve the transparency and integrity of trading on crypto exchanges. Approval is done on the fact that the ETF price must be based on an index of exchanges meeting certain prescribed standards. This gave a reason for exchanges to adopt such standards and for trading to flow to them.
It also created a plan for future legislation. Moreover, CFTC now incorporates similar standards in approving crypto derivatives, which involves examining the risk of manipulation in the underlying cash market. This method could provide a motivation for decentralized exchanges to evolve ways to meet such standards.
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Decentralized finance (DeFi) is an important part of the crypto ecosystem. It could prevent common problems that usually regulate the fat capitalized players in the industry. Finally, approval of an ETF could further legitimize the industry and provide independence to investors to make their own decision. Additionally, it also provides transparency, integrity, and investor protection for investors.
