Why the US Security Exchange Commission’s approval of a cryptocurrency backed ETF will be so importa

The day the SEC approve an Exchange Traded Fund backed by cryptocurrency will be an important legal and historical milestone in the evolution of this emerging asset class.

Approval by the SEC would be game changing for the crypto world because as a ‘registered security’ it would open the doors for institutional investors, who are largely prevented by their mandate from investing in anything other than registered securities. It is estimated that at least USD 300m would flow into a bitcoin EFT in the first week alone. Given that the daily daily turnover of bitcoin is circa USD 200m, the demand side is likely to be significantly out of kilter with supply for a good period of time.

There area number of cryptocurrencies seeking SEC/ETF approval at present. The two of most interest are Bitcoin (backed by the Winklevoss brothers) and Ethereum (backed by the Etherindex Ether Trust).

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