Bitcoin has climbed back over the psychological $4,000 mark after falling as low as $3,600 last week amid a rout that has wiped billions from the market capitalizations of the world’s biggest cryptocurrencies—despite the head of the U.S. Securities and Exchange Commission (SEC) warning a much-anticipated bitcoin exchange-traded fund is “unlikely” any time soon.
The bitcoin price has added almost 10% over the last 24 hours as investors and traders fight back against a massive sell-off that has gripped the sector since the bitcoin cash cryptocurrency became embroiled in a civil war, resulting in a so-called hard fork that meant it split into two separate digital tokens.
Bitcoin’s bounce carried over to most other major cryptocurrencies, including Ripple’s XRP, Ethereum’s ether, and stellar lumens—all of which added around 5% over the last 24 hours.
A lack of investor protection was blamed by the SEC chairman Jay Clayton for knocking the chances of his agency approving a bitcoin ETF in the near future, adding to fears bitcoin can be too easily stolen or manipulated on exchanges that have insufficient surveillance.
“What investors expect is that the trading in that commodity that’s underlying the ETF is trading that makes sense, is free from the risk or significant risk of manipulation,” Clayton reportedly told the Consensus Invest Conference in Manhattan. “Those kinds of safeguards don’t exist in many of the markets where digital currencies trade.”
The SEC is currently weighing whether to approve a bitcoin ETF request filed through the Chicago Board of Exchange (CBOE) by New York-based VanEck and blockchain platform SolidX, though hopes have been somewhat muted recently by the SEC delaying its decision, now expected late December.
If approved, a bitcoin ETF would mean people are able to buy into bitcoin without having to deal with clunky exchanges that often struggle with cumbersome regulation and lack of public trust.
The cryptocurrency sector has been eagerly awaiting a bitcoin ETF since the beginning of this year, with expectations of institutional involvement in the bitcoin market helping to bolster the price throughout 2018. Fears have mounted in recent months that traditional financial services companies may put their plans to offer bitcoin products on hold until global regulators have taken a position, leading to the bitcoin price falling more than 80% from its all-time highs.
In August this year, the SEC rejected nine applications for a bitcoin ETF.
However, New York exchange operator Nasdaq has now confirmed it is moving ahead with a plan to list bitcoin futures, betting on sustained interest in bitcoin despite the cryptocurrency’s dramatic plunge this year. It wants to allow bitcoin futures trading in the first quarter of 2019.
Many potential bitcoin investors are meanwhile keen to know whether bitcoin acts as a currency or a security, asking the SEC’s chairman where he stands.
“An asset like bitcoin, where it’s designed to be a replacement for sovereign currencies, we’ve determined that doesn’t have the attributes of a security,” Clayton said. “I’ll leave the commodity question to the CFTC. As far as I’m concerned, it’s designed to be akin to the dollar, the yen, the euro. And it operates that way. People who purchase it are expecting it to operate that way.”