The Securities and Exchange Commission (SEC) has just outlined its views to two Wall Street trade groups in a letter to clarify its decision. Bitcoin’s volatility and potential lack of financial backing would fit with funds that Wallstreet Sells which typically calculate a fair market price for their clients’ portfolios at the end of every trading day and how will they allow investors to easily cash out their shares, given that there is no guarantee of legal tender behind cryptocurrency.
“Until the questions identified above can be addressed satisfactorily, we do not believe that it is appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products,” the SEC’s director of investment management, Dalia Blass, wrote in the letter made public Thursday.
Since the increased media coverage late last year, there have been multiple ETF issuers racing to launch the first bitcoin fund; however, the SEC has so far been skeptical. The SEC has also expressed reservations about initial coin offerings, saying that many ICOs, in which a firm raises money from investors in exchange for a new coin, are securities sales that should comply with its investor protection rules.