Bitcoin ETF is highly expected by the market, and it is generally believed that the approval of Bitcoin ETF will greatly enhance the existing pattern of Bitcoin.

ETF is a special fund model that combines the advantages of closed-end funds and open-end funds, and is also considered to be one of the greatest financial innovations in the past ten years.

Closed-end funds can directly buy and sell fund shares on the exchange, but they cannot purchase or redeem from fund managers during the closed period, and can only be realized through the secondary market.

An open-end fund is a fund of variable size that can be purchased and redeemed at any time, but cannot be traded on an exchange, and can only be applied to the fund manager for operation.

so

soAn important feature of ETF is that it can directly participate in the investment of fund targets on exchanges. The exchanges mentioned here are not unregulated digital currency exchanges such as Binance and Huobi, but national ones that are strictly regulated. Traditional exchanges such as stocks and futures.

It is oriented to institutions, retail investors, and funds in the entire traditional financial field. Its user volume and capital volume are unmatched in the blockchain field, and the potential buyers it can bring far exceed the existing number of cryptocurrency users.

At the same time, it is also a sign that Bitcoin has been recognized and has entered the ranks of mainstream investment varieties. From now on, you can buy digital currency like buying and selling stocks, which will greatly accelerate the acceptance of encrypted assets such as Bitcoin, and greatly enhance the breadth and depth of cryptocurrency coverage. , so that the blockchain can be accepted by the mainstream crowd more quickly.

Therefore, the importance of Bitcoin ETF is very obvious, which is why many people believe that once it is approved, it will usher in a super bull market.

But, you know there are bound to be buts.

Such a major event will not be done easily. The application of the Bitcoin ETF can be traced back to 2014, the Winklevoss brothers, the founders of the Gemini exchange. After 3 years of review, the SEC finally rejected the application of the Winklevoss brothers.

After that, SolidX’s 16-year application was also rejected. After 17 years, many companies and exchanges continued to apply and did a lot of compliance work, but these applications were frequently postponed, and all of them were rejected in the end without exception.

The encrypted media Cointelegraph has made a timetable for the Bitcoin ETF to apply to the SEC. It can also be seen from the table that the Bitcoin ETF has experienced multiple extensions and denials.

The SEC believes that all applicants cannot solve the problem of "fraud and manipulation" in the Bitcoin market. SEC Chairman Jay Clayton also reiterated the prerequisites for approving the Bitcoin ETF in June this year: custody solutions and market manipulation countermeasures.

For supervision, the security of investor investment and anti-manipulation are very important. The custody of Bitcoin is much more difficult than that of stocks, and it is vulnerable to various attacks and threats. It can be said that the custody of large amounts of funds is very difficult.

Even top exchanges cannot avoid the risk of being stolen, and top exchanges such as Mt.Gox, Bitfinex, and Binance cannot escape being stolen, so the custody of Bitcoin is a big problem.

If the custody issue cannot be resolved, the SEC will inevitably fail to pass the approval.How can a trading category that may lose underlying assets allow investors to trade with confidence? This is an intolerable situation in a strictly regulated exchange.

The second is the risk of manipulation. Manipulating the market is inevitable in an environment without supervision. Even in the traditional financial market that is strictly regulated, there are too many people manipulating the market for huge profits.Manipulating the market is naked wealth grabbing, and it is equally intolerable for a regulated financial market.

If it is said that Bitcoin is too large to be manipulated, it is really too young.

Compared with the size of the traditional financial market, is the market value of Bitcoin so difficult to be manipulated? Please don't be ridiculous.

The problem of custody and market manipulation cannot be solved, and it is a very high-risk trading product. If such a product enters a national compliant exchange and allows customers across the country to buy and sell, then the SEC should dismiss the get out of class.

3. Bakkt brings new hope

The launch of Bakkt brought light to the review of Bitcoin ETF.

Bakkt is a compliant futures exchange with compliant custody capabilities (will be launched in September). Its first launch is the daily settlement bitcoin futures contract, and Bakkt's futures contract is a physical delivery model.

The daily-settled physical delivery futures contract is equivalent to a leveraged spot transaction, which can be understood as the first regulated spot exchange.

Because Bakkt is subject to strict supervision and implements various regulatory policies, there is no risk of being manipulated. If the transaction of Bakkt reaches a certain volume, its price will have an anchoring effect on the market, and its price may also be considered by regulators to be Bitcoin real price.

If the SEC accepts that its price is not manipulated, it can solve the problem that the SEC believes that the price of Bitcoin is easy to manipulate.

From here, it can also be speculated that Bakkt's daily settlement price will become the price used by many other businesses around the world.

Of course, there is also the second important capability of Bakkt, which is Bakkt's compliance custody.

Bakkt is a physical delivery futures contract. Without a sound custody mechanism, it is also impossible for it to be allowed to go online by regulation.

And it was able to go online precisely because it met the requirements of the New York State Financial Services Authority for custody, and established a qualified custody institution - Bakkt Trust Company.

Therefore, Bakkt has compliance custody capabilities, and it also provides supporting insurance services to enhance its custody capabilities.

If the SEC recognizes Bakkt's compliant custody capabilities, then the two prerequisites required by the SEC have been met, and the approval of the Bitcoin ETF may also be realized soon.

At that time, it also means that Bitcoin will occupy a place in the mainstream financial market, and the regulatory policy will be relatively perfect. Bitcoin will be accepted and recognized by more people as a financial asset, and the liquidity of Bitcoin will be greatly increased. The consensus will also be greatly enhanced, and it will also be of great help to Bitcoin's digital gold road.

———— District brother’s comment: ————

Bitcoin ETF is of great significance to Bitcoin and the entire cryptocurrency market. The launch of Bakkt solves the long-standing risk of "custody and manipulation" in the Bitcoin market and paves the way for the launch of Bitcoin ETF.

If the regulators are enlightened enough, it may go online soon, and in conjunction with the halving of Bitcoin, it may usher in a new upward cycle.

Disclaimer: This article is the author's independent point of view, and does not represent the position of the Blockchain Institute (public account), nor does it constitute any investment opinion or suggestion. The picture comes from the Internet.

-END-

Disclaimer: This article is the author's independent point of view, and does not represent the position of the Blockchain Institute (public account), nor does it constitute any investment opinion or suggestion. The picture comes from the Internet.