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Jan. 20, 2021, 2:47 p.m. EST

Bitcoin ETF? A crypto Holy Grail. But don’t expect to see one soon, say experts

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Mark DeCambre and Andrea Riquier

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“In order to price a security,” if bitcoins and other assets are deemed as such, “in a methodical way it has to be pegged to something priced in a repeatable standardized way,” Lynch said.  

The FrontLine consultant said that the inability to price cryptos makes them more vulnerable to manipulation and harder to regulate.

“Price stability comes from being able to effectively value it in a proven and repeatable and standardized method,” she said.

“The question is always, what’s the price,” van Eck also noted. “You have to have a completely trustworthy infrastructure,” he explained.

Bloomberg News on Friday that Gensler may be inclined to take a firm look at bitcoins and the cypto complex.

“If it gets broad adoption, if we really think the crypto world is going to be part of the future, it needs to come inside of public policy envelope,” Bloomberg quoted Gensler saying in a 2018 interview.

That sort of talk may be grist for the bulls who see it as an implicit nod to the eventuality of a digital-currency ETF.

“I do think [Gensler] has knowledge and interest in that space,” said FrontLine Compliance’s Lynch.

She cautioned, however, that pursuing an ETF may not be a high priority for Gensler, should he be nominated.

“It is not a question of if, it is a question of when,” said Michael  Sonnenshein, managing director at Grayscale, one of the largest managers of cryptocurrencies via the Grayscale Bitcoin Trust /zigman2/quotes/203330852/composite GBTC -2.34% and similar ethereum-focused investment entities.

Sonnenshein said that the market infrastructure has evolved significantly from three years ago when there was a retail-fueled fervor that was capped by an epic collapse in bitcoin’s price in early 2018.

Lynch said that she doesn’t doubt that an ETF will happen but warns that the SEC may have larger priorities at hand.

“I agree that it isn’t a question of if but when, but it will take time and it’s not going to happen in early days of his role in the SEC,” Lynch said.

“This is going to take a lot of time and effort,” the former SEC examiner said.

And in the end, even if a bitcoin ETF does come to pass it may be a problem, at least in the early days, for the market as investors pour out of investments like Grayscale and into new low-costs alternatives, speculated JPMorgan Chase & Co. analysts in a Jan. 8 research report.

“A cascade of GBTC outflows and a collapse of its premium would likely have negative near-term implications for bitcoin given the flow and signaling important of GBTC,” the JPM analysts wrote .

Meanwhile, investors will have to turn to Grayscale, and other bitcoin-adjacent assets like mining stocks Marathon Patent Group /zigman2/quotes/205886758/composite MARA -7.62% , Riot Blockchain /zigman2/quotes/209538617/composite RIOT -7.21% and others, which have their own inherent risks of volatility.

Read next: 6 reasons bitcoin is trading at its highest level since 2017 — and 1 warning

/zigman2/quotes/203330852/composite
US : U.S.: OTC
$ 51.37
-1.23 -2.34%
Volume: 6.43M
April 16, 2021 3:59p
P/E Ratio
2.53
Dividend Yield
N/A
Market Cap
$36.42 billion
Rev. per Employee
N/A
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/zigman2/quotes/205886758/composite
US : U.S.: Nasdaq
$ 38.93
-3.21 -7.62%
Volume: 23.66M
April 16, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.16 billion
Rev. per Employee
$1.45M
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/zigman2/quotes/209538617/composite
US : U.S.: Nasdaq
$ 44.64
-3.47 -7.21%
Volume: 24.56M
April 16, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.05 billion
Rev. per Employee
$1.51M
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