Business

Erik Gibbs

US trails Europe, Asia in crypto ETFs

The fears of many in the U.S. crypto community that the country would take a back seat in cryptocurrency innovation seem to have been valid. Several reports surfaced today that indicate other countries are prepared to introduce crypto exchange-traded funds (ETF), while the U.S. crypto market languishes as regulators drag their feet. If the stories are correct, Asia will see ETFs long before the U.S. is ready. 

According to an interview with Bloomberg from yesterday, a UK-based crypto exchange will soon be offering physical Bitcoin Core (BTC) futures to the Asian market. Coinfloor, through its CoinfloorEx division, will introduce the CoinFLEX (Coin Futures and Lending Exchange). CoinFLEX is comprised of an international consortium of individuals from the U.S., the UK and others. 

The new exchange will be based in Hong Kong and managed by Mark Lamb, the co-founder of Coinfloor. It is expected to offer both BTC, Bitcoin BCH and Ethereum physically-delivered futures to retail investors and is expected to launch in February. 

In another Bloomberg report, a person “familiar with the matter” has indicated that Japan’s Financial Services Agency (FSA) is willing to embrace crypto ETFs. The agency is reportedly in the process of researching the amount of interest in the futures and, based on feedback, will make the determination whether or not to allow them to go live. 

The country’s Liberal Democratic Party is expected to introduce a draft bill this March that might include amendments to Japan’s financial rules that could pave the way for the futures products. The legislation, which would more than likely allow for more industry self-regulation and which would classify many initial coin offerings (ICO) as securities, would then be put into law by next year. 

In the U.S., however, multiple attempts to introduce ETFs have repeatedly failed. The Winklevoss brothers, founders of the Gemini exchange, have approached the Securities and Exchange Commission (SEC) several times to try and get the financial agency to approve futures products, but all of the attempts have failed. The only product still standing is one offered by VanEck and SolidX, which is still under review by the SEC after six months. 

The VanEck futures product was first rejected by the SEC before the commission had a change of heart and decided to review it further. The commission has been called out by one of its own, Commissioner Hester Peirce, who has asserted that the group is overstepping its bounds in rejecting the proposal. Jay Clayton, the chairman of the SEC, has said that there more than likely won’t be a crypto ETF until market manipulation concerns are allayed because, of course, there’s never any market manipulation in “traditional” stock exchanges.

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