News of a potential launch of a bitcoin ETF has taken centre stage in the US after Securities and Exchange Commission (SEC) threw a spanner in the works by refusing to make a decision about whether or not to allow the launch to go ahead.
The regulator instead said it was seeking additional public feedback on the proposed launch, which would trade baskets of shares tracking the digital currency.
This proposal has been put forward by twin brothers Tyler and Cameron Winklevoss, who have been advocating the launch since 2013. They already run the WinkDex, a bitcoin price index, and Gemini, a bitcoin custodian and exchange, according to MarketWatch, but the ETF would be the first one of its kind.
Another company seeking to launch an ETF tracking the value of bitcoin is SolidX Management, which filed a request with the SEC in July, but is subject to the same delays as the Winklevoss brothers.
Reports suggest the latest delay comes on the back of concerns over the stability of the digital currency, which has seen significant price fluctuations, while some commentators also suggest there could be a conflict of interest between Gemini and the new ETF.
WinkDex is up some 152% over the past year to 14 October, but it has risen as high as $771.65 during the course of the year, before falling back to trade at its current value of $637.29 (more information can be found here).
Yet the volatility of the digital currency has seen the value of Bitcoin Investment Trust fluctuating a whole percentage point in either direction in one day earlier this week, and many in the market remain nervous about the long-term prospects of the digital currency, prompting caution from the US regulator.
In a filing, the SEC said: “The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal.”
Meanwhile, experts are suggesting bitcoin could enjoy the same boost from the launch of these ETFs, if they are approved, as gold and commodity markets experienced when the first commodity ETFs were launched back at the beginning of the 21st century. It would make the investment option available to a larger number of investors and could send the price of bitcoin soaring, they said.
Bitcoin technology was first launched in 2008 by a group of programmers operating under the name of Satoshi Nakamoto and has been growing in popularity ever since.
Earlier this year, the Financial Times published an article revealing five of the largest fund management groups in the UK, including Schroders, Aviva Investors and Aberdeen Asset Management, are believed to be testing out bitcoin technology to see if it could reduce trading costs.
If bitcoin ETFs are approved, they could be a revolutionary development for both the ETF market and the digital currency, but is it a reality or just a pipe dream? Only time will tell.