ETF funds have been mentioned more than once on the cryptocurrency market. In fact, these funds came from the securities market, and they represent affordable investment decisions. In other words, you invest in a wide range of trading instruments with one transaction. This approach to investing is more flexible and allows you to focus more on the medium-term perspective. Roughly speaking – up to a year. This is a kind of alternative to classic investment funds, which are more costly to maintain.
It is known that some sectors of the economy may fall, and some may grow. So, strictly speaking, you can “leave” the falling industries for the growing ones, without losing time and leaving a trading terminal. You can use such an approach in investing, for instance, trading in world indices. It is known that there is a need not only to analyze the market with the help of stock indices but also to invest in them. ETF on indices are of particular interest more than ever. But due to the development of the blockchain and the popularization of cryptocurrencies, there is a need for cryptocurrency ETFs. In other words, buying a wide range of the most capitalized cryptocurrencies with one purchase. But first, let’s consider what challenges this product faces and what has already been done.
SEC is not ready to accept cryptocurrency ETFs.
Due to the anonymity of transactions, and the lack of security of crypto exchanges, the question arises – whether the investor will be as safe as the holder of the shares of Apple. Indeed, due to the development of blockchain technology, it is still too early to talk about how much it “matured” and entered everyday life. That is why The United States Securities and Exchange Commission (SEC) still holds a pause in this matter.
It is embarrassing that there are statistics of 2018 where crypto exchanges appear. It indicates which exchanges were hacked, and how much cryptocurrency was withdrawn in total. Obviously, it is not comforting, and this stops the regulator in approving cryptocurrency ETFs to a certain extent. Great security risks.
In addition, it is necessary to take into account the mechanisms created to allow recognition of cryptocurrency pyramids. And most importantly, that they do not get into the calculation of an ETF. After all, it is known that the sites of such “enriching systems” look much better and more impressive than, for instance, laconic Ripple. This can mislead an ordinary investor.
There is a question on the agenda of the regulator of how protected investors are from market manipulations. It’s no secret that crypto exchanges are not a part of self-regulatory organizations (SRO). Thus there are no uniform rules for regulating trading activity. That is why in 2018 the over-the-counter market began to develop so strongly. Where large and medium market participants can make an exchange with one hundred percent guarantee. Such sites, as a rule, require a greater degree of customer verification, and at least a large lot on transactions.
However, many industry experts, including the Cameron brothers and Tyler Winklevoss, believe that “ETFs should start correctly.” There is a logic to this because a promising technology is like a big ship that needs deep water. Therefore, there are still optimists among hedge fund managers in the cryptocurrency market. Their funds invest in promising developments with a prospect of 5 and ten years.
New SEC Rules
As for the SEC rules, they are in favor of previously released ETFs. It is about unification so that there are no exotic varieties with loans. In addition, it is known that there are blockchain ETFs. They are already popular among those who want to invest in high-tech solutions. That is why the unification of ETF cryptocurrency with the presence of the problems mentioned above, is on the discussion agenda.