January 14, 2019 | AtoZ Markets - According to the representative of the Japanese Financial Services Agency (FSA), they are not considering the issue of approval of the Bitcoin Exchange Fund (ETF). Will the Japanese regulator's decision affect global ETF position in the market?
Japan doubts the need for Bitcoin ETF
Last week, several sources reported that Japan is exploring the possibility of accepting bitcoin-ETFs as an alternative to the bitcoin futures. Such reports led to an increase in expectations regarding approval of the VanEck Bitcoin ETF, which will be decided by the US Securities and Exchange Commission (SEC) by the end of February.
The financial experts assume, that the emergence of strictly regulated investment instruments in a large market, like Japan, will reduce the risk of price manipulation.
However, in their statement, the representative of the FSA said that the authority not considering the need for any derivatives associated with the cryptocurrency, at the moment, strengthening its position on both the crypto ETF and futures products. In one of the recent interviews, a representative of the FSA confirmed that "the organization is currently not considering approving the ETF for tracking digital assets.
The financial regulator's officials explained, that "it is difficult to find the constructive and social importance of trading in derivatives of crypto assets at the present time" and "there is no need to trade in derivative crypto assets on financial instrument exchanges where many market participants can trade.”
Japanese Authority Decision Will Not Have Crucial Effect on ETF
Jake Chervinsky, an attorney for government protection and securities litigation at Kobre & Kim, said that Japanese regulators decision is likely to have minimal impact on the ETF approval by U.S. SEC.
Chervinsky explained that, although launching ETF globally might resolve key issue in price manipulating, the U.S. crypto regulator will stay immune to such changes.
According to the crypto experts, Bitcoin ETF in Japan or in any other large cryptocurrency market will never have any impact on the decision of SEC USA, since the commission prefers to act as a leader in international regulation.
The decision of the Japanese regulator, according to the experts, demonstrates the readiness of the FSA and the Japanese financial authorities to focus on strengthening the infrastructure of the local cryptocurrency market, rather than switching to investment instruments that could provide the mainstream asset class in a short period of time.
A Brief History of Bitcoin ETF in the USA.
Over the past few months, several ETFs have been rejected by the U.S. SEC due to the various reasons, including manipulation and security threats.
Since then, companies such as VanEck and Bitwise have submitted ETF proposals that address most of the issues that SEC has publicly stated in the past. For example, the bit-by-bit cryptocurrency hedge fund that applied for the ETF this week created an index to track Bitcoin prices on exchanges, futures markets and over-the-counter trading floors (OTC), trying to find the exact price of the dominant cryptocurrency based on the maximum daily amount.
Regardless of the progress made in overseas markets, U.S. SEC is likely to continue to identify areas for improvement after giving up each ETF filing, which may increase the likelihood of a Bitcoin-ETF in the long run.
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