Commissioner Brian Quintez of the CFTC recently expressed his support for crypto-ETF by saying ETF product on a crypto-asset solves a lot of institutional hesitancy.
According to many, regulatory barriers have remained an obstruction to the crypto-evolution. space’s For some, the need for a crypto-ETF, particularly in the United States, has been a long-held belief. However, the country’s Securities and Exchange Commission has repeatedly delayed the listing of such funds on Wall Street due to concerns about manipulation.
However, not every regulator in the country shares this view. Commissioner Brian Quintez of the Commodity Futures Trading Commission (CFTC) recently expressed his support for the approval of a crypto-ETF product. Quintez believes that such a product could significantly increase adoption among skeptical large-ticket investors and companies. He continued,
“I do think that an ETF product on a crypto-asset solves for a lot of institutional hesitancy where there is probably demand and it gets to the accounting treatment of this.”
The regulator’s reference to the Bitcoin accounting issue here refers to the fact that Bitcoin investments are currently classified as intangible assets on company balance sheets. This eliminates any real financial incentive for businesses to divert significant funds to digital assets.
Additionally, these assets are evaluated on a regular basis for impairment, which is negative if they trade below the purchase price. This is a common occurrence in volatile crypto markets. This also has the unintended consequence of discouraging investors from placing their trust in the assets. Quintez expanded on this point, saying,
“If you gain that exposure through an ETF, it becomes a security which is marked to market in real-time and you don’t have to worry about the custody issues. So, there are broad implications for this and I hear about demand all the time and given that it is a commodity on which Future contracts are already listed, I can’t understand but also nor speak to the hesitancy at our sister agency.”
The precedent set by the CFTC
As an example, the Commissioner cited the CFTC’s own approval of BTC Futures in 2017. The CFTC did not make any value judgments in the aforementioned case, such as whether they were an appropriate investment tool. Rather than that, the agency concentrated on reducing the index’s vulnerability to market manipulation. As a result, the final listings were value-neutral and technologically neutral. They also made it possible to convict potential manipulators, he added.
While countries such as Canada and Brazil have approved Bitcoin and Ether ETFs, the SEC has yet to approve dozens of such applications. Surprisingly, SEC Chairman Gary Gensler hinted at the possibility of approving a BTC ETF in the United States during a recent speech. This, however, would be subject to a stringent set of criteria that would exclude ETFs that are solely focused on Bitcoin Futures.
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