Two US companies ditched plans to launch bitcoin exchange-traded funds, (ETFs) citing ongoing concerns by the Securities and Exchange Commission (SEC), Reuters reports.
Staff at the SEC “expressed concerns regarding the liquidity and valuation” of futures contracts based on the digital asset, according to one of its filings.
Trusts controlled by Rafferty Asset Management and Exchange Traded Concepts each abandoned plans to launch three bitcoin funds that could be traded by retail investors as easily as stocks. Neither firm could be reached for comment.
Fund managers thought the proposals had a chance at winning approval given the launch last month of futures contracts based on bitcoin on both the CME and the CBOE exchanges.
What complicates matters is that no one single regulator has control in dealing with this relatively new and volatile crypto asset.
The SEC has dominion over funds, while the Commodity Futures Trading Commission (CFTC) governs futures contracts. The CFTC has been under pressure to address concerns it did not fully assess the potential risks that bitcoin poses to the financial system.
The SEC and the CFTC have so far not commented on the matter.
One of the ETFs being proposed was designed to rise or fall in price twice as fast as the price of bitcoin on a given day. Over the last two years alone, bitcoin has gained or lost more than 10 % on a single day 26 different times, according to data from the Bitstamp exchange.
The volatility of cryptocurrencies is a major concern and is why so many in the City and on Wall Street are warning of a ‘bubble’. In just the last 24 hours, a variety of cryptocurrencies have fallen markedly, Bitcoin 5.1% Ripple 8.8%; Cardano 7.8%, Litecoin 6%; Tron 15.6% and Ethereum Classic 13.1%.