‘Godfather of ETFs’ Says Bitcoin Exchange-Traded Funds Will be Approved ‘No Time Soon’

The “godfather of ETFs” Reggie Browne said that Bitcoin ETFs will be approved “no time soon,” speaking at Georgetown University's Financial Markets Quality Conference.

Reggie Browne, the so-called “godfather of ETFs,” said that Bitcoin (BTC) Exchange-Traded Funds (ETF) will be certified “no time soon,” Business Insider reported Nov. 1. Browne is a senior managing director and head of ETF trading at financial services firm Cantor Fitzgerald.

Founded in 1945, Cantor Fitzgerald focuses on institutional equity, fixed income sales, and trading. The company reportedly has over 5,000 institutional clients, which includes such fields as investment banking, prime brokerage, and commercial real estate.

Speaking at Georgetown University's Financial Markets Quality Conference in Washington D.C., Browne reportedly said that BTC ETFs will be approved only after the development of a strong regulatory framework in the industry. Addressing the current state of BTC ETFs, Browne stated:

"It's very difficult for the [Securities and Exchange Commission (SEC)] to wrap their heads around a positive approval because there's no data yet … the markets just aren't here."

Earlier today, the CEO of investment management corporation BlackRock Larry Fink made a similar statement. When commenting on cryptocurrency ETFs’ future, Fink claimed that ETFs “ultimately” have to be backed by a government, and that a government will not greenlight such a financial instruments unless it knew the funds were not being used for illicit activities.

Following some widely publicized rejections of BTC ETF applications by the U.S. SEC, the CEO of crypto payment startup Abra Bill Barhydt suggested that the reason the SEC has insofar denied crypto ETFs is because the crypto industry does not fit the applicant archetype. In particular, the SEC has rejected crypto ETF applications because “people who are doing the applications don't fit mold of who the SEC is used to approving."

In August, the SEC temporarily rejected nine applications to list and trade various BTC ETFs from three companies, including ProShares, Direxion, and GraniteShares. The regulator previously denied the application for a BTC ETF by brothers Tyler and Cameron Winklevoss. The SEC then justified its rejection by saying that “the record before the Commission does not support such a conclusion.”

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Crypto Investment Firm’s Revenue Reaches Record $330 Mln in 2018, Despite Bear Market

Crypto investment firm Grayscale Investments Inc. has raised almost $330 million in annual revenue as of the third quarter 2018, despite a prevailing bear market.

Cryptocurrency asset management firm Grayscale Investments Inc. has reported revenue of nearly $330 million in 2018, according to its third quarter (Q3) investment report released Nov. 1. The company managed to reach this figure despite a prevailing bear market.

In the report, Grayscale highlights that it raised $81.1 million over the last three months, which brought the firm’s year-to-date inflows to almost $330 million, representing an increase of almost 1,200 percent from the same period in 2017, when the company raised $25.4 million. The current year is the strongest Grayscale has experienced during any calendar year since the beginning of its activity.

Grayscale cumulative inflows by investment product chart. Source: Grayscale

Grayscale cumulative inflows by investment product chart. Source: Grayscale

In Q3, institutional investment contribution reportedly increased to 70 percent, however, in comparison with the two previous quarters, the dollar-value invested remained lower. The Bitcoin Investment Trust saw 73 percent of inflows, while 27 percent were into Grayscale products pegged to other digital assets. The first positive quarterly returns for Grayscale in 2018 were generated by Bitcoin Investment Trust and XRP Investment Trust.

In terms of average weekly investment, Q3 saw $6.2 million, which is lower than the company’s average weekly investment across all products during 2018. “The average weekly inflow into Bitcoin Investment Trust was $4.5 million, down from the year-to-date average of $5.5 million. The average weekly inflow into “Non-Bitcoin” investment products was $1.7 million, down from the year-to-date average of $2.9 million,” Grayscale specifies.

Grayscale further notes that, despite the majority of new investment in Q3 going into Bitcoin Investment Trust, investors are diversifying their portfolios into other digital assets, with 66 percent and 34 percent respectively. 64 percent of all new investments originate from U.S. investors, who are followed by offshore investors, and investors from other parts of the world.

In the beginning of October, Bitcoin Investment Trust saw its net asset value hit the lowest point since the BTC price surge of 2017. Shares of Bitcoin Investment Trust reportedly dropped by around 80 percent since BTC hit almost $20,000 last December. The drop purportedly follows the fall of the BTC price, which is down nearly 66 percent during the same timeframe.

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BlackRock CEO: Crypto ETF Will Come When Industry Is ‘Legitimate’

BlackRock CEO Larry Fink said that the company will not offer a crypto ETF until the crypto industry becomes “legitimate.”

The CEO of investment management corporation BlackRock, Larry Fink, does not see the company offering a cryptocurrency Exchange-Traded Fund (ETF) until the industry is “legitimate,” CNBC reported Nov. 1.

BlackRock is a financial planning and investment management firm that currently has $6.28 trillion in assets under management, including equity, real estate, fixed income, and cash management.

Speaking at the New York Times Dealbook Conference in Manhattan on Nov. 1, Fink questioned the reasonability of launching a crypto ETF, at least until the industry becomes “legitimate.” “I wouldn’t say never, when it’s legitimate, yes,” Fink stated.

Fink reportedly said that ETFs “ultimately” have to be backed by a government, and that a government would not greenlight such a financial instrument unless it knew the funds were not being used for illicit activities. Fink noted Bitcoin’s (BTC) anonymity as a risk factor, since the leading digital currency could possibly be used for “tax evasion and all of these other issues." He added:

“I do see one day where we could have electronic trading for a currency that could be a store of wealth. But right now the world doesn’t need a store of wealth unless you need that store of wealth for things you should not be doing.”

Although Fink expressed some skepticism towards cryptocurrencies, he pointed out that the company is “a huge believer in blockchain.”

“The biggest use for blockchain will be in mortgages, mortgage applications, mortgage ownership, anything that’s labored with paper.”

Fink’s comments come ahead of the Nov. 5 deadline that the U.S. Securities and Exchange Commission (SEC) set for reviewing proposed rule changes related to a series of applications to list and trade various BTC ETFs. The review period affects nine separate ETFs that had been proposed by three different applicants, including ProShares, in conjunction with the New York Stock Exchange (NYSE) ETF exchange NYSE Arca, and Direxion.

Last month, crypto analyst and host of CNBC’s show Cryptotrader Ran Neuner claimed that a Bitcoin ETF is a “way bigger deal” than a cash settlement Bitcoin futures contract, since it “requires actual purchase of BTC.”

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