It may be still be some time before investors will be able to trade in digital currencies through funds like those linked with stocks and other securities. Intercontinental Exchange, Inc. (ICE) had hoped to launch Grayscale Investments LLC’s Bitcoin Investment Trust (GBTC) for just that purpose, but reportedly withdrew its application once it ran into difficulties with the U.S. Securities and Exchange Commission (SEC). On the same day, Van Eck Associates Corp. withdrew a similar registration document for a proposed bitcoin fund as well, once the SEC informed the company the filing could not be reviewed until futures contracts began to trade.
Shifts in Digital Currency Regulation
Grayscale released a statement regarding the withdrawal, indicating that “although digital currency market regulation continues to rapidly evolve, at this time Grayscale does not believe there have been enough regulatory developments to prompt the SEC to approve the…application,” according to Reuters. As of this writing, Bitcoin Investment Trust is traded “over-the-counter” for prices that are higher than the value of the bitcoin it is linked to. By Thursday, shares in the trust had fallen by 3.2% to $715.50, which is still nearly double the appraisal that the bitcoin assets linked to the trust were worth about $386.60 per share.
Over the course of the year, GBTC shares have climbed by about five times, outpacing the 332% growth in bitcoin as of this week. Bitcoin hit a fresh record high earlier in the summer, when it climbed to nearly $5,000 per coin. In the weeks since, it has fallen somewhat. This is likely as a result of news from China in recent weeks that bitcoin and other cryptocurrency exchanges would be shut down and that ICOs would be banned outright. Harsh words from JPMorgan Chase CEO Jamie Dimon may have also contributed to the currency’s plunge. Dimon called the cryptocurrency “a fraud” and predicted it will crash.
SEC Approval Pending
Should the SEC approve Bitcoin Investment Trust and other similar ventures, it may result in even more investors approaching the cryptocurrency. Still, the SEC has shown caution in the face of increasing demand amongst cryptocurrency enthusiasts. For example, in March of this year, the SEC blocked two bitcoin-related products. A similar type of proposal with a product linked to ether, bitcoin’s largest competitor, was also pulled earlier in September.
The U.S. government is not alone in exercising caution when it comes to the unregulated digital currency world. However, there are other governments around the world which are adopting different stances. Bitcoin-tracking investment products are already available for trade in Europe, and the Canadian regulatory authorities are reportedly considering one as well. There are at least two other proposals in place which would attempt to bring cryptocurrencies to U.S. exchanges, and the SEC has yet to comment on them.