ETF Queen Moriarty Takes on SEC for Bitcoin

Co-launcher of one of the world’s first ETF fund Kathleen Moriarty is now lobbying US regulators for a Bitcoin equivalent.

Also read: ‘Blockchain Hype Will Translate to Higher Bitcoin Prices,’ Says XBT Provider

‘Optimistic’

Moriarty, as a lawyer known for circumventing legislation to bring innovative “exotic” products to market, intends to “convince” regulators of a Bitcoin fund’s suitability in 2015. If successful, it would allow investors to have access to Bitcoin without having to hold it directly themselves.

Speaking to the Wall Street Journal this week, Moriarty was buoyant about the prospect of the Bitcoin project gaining approval without the US Securities and Exchanges Commission (SEC).

“I’m optimistic,” she said.

The first Bitcoin ETF began work in May 2015 under the symbol GBTC and has enjoyed rapid growth, in spite of the market meltdown in August linked to fears about the Chinese economy.

Moriarty also played down the overall effect of volatility for a Bitcoin offering, noting however that volatility in Bitcoin itself was a potential sticking point in her plan.

Regulators have also been quick to address the issue. “Indeed, even plain-vanilla, equity-index ETFs may present risks that are not always anticipated or fully understood, as evidenced by the events of Aug. 24, 2015,” SEC Commissioner Kara Stein said in February.

Bitcoin ETF in vogue

Meanwhile, investment bank Needham & Company began covering GBTC last month, also releasing a report stating Bitcoin to be undervalued by around $200.

“We believe that the price of Bitcoin stands to benefit substantially from rising demand for its two main use cases as a ‘digital gold’ and as an alternative payments channel,” Spencer Bogart, the analyst who submitted the report, said, adding that:

[…] Bitcoin is disrupting trillion-dollar markets in payments and value-exchange.

While the SEC has nonetheless changed its stance on ETFs following the episodes in August, Moriarty’s optimism on Bitcoin could stem from her previous run of paving the way for niche instruments to achieve success.

Seven years in the making was getting the SEC on-side for leveraged ETFs, whose risk is markedly higher than the conventional model. In terms of Bitcoin, Moriarty’s plan echoes SPDR Gold Trust, which she helped launch in 2004, giving investors access to the gold markets without needing to hold the asset.

The mutual benefits for ETFs from cross-asset investors was highlighted in the Needham & Company report, Bogart writing:

“[…] We believe that the better comparable is the portion of the gold market held in ETFs—that is, we think that people who gain exposure to gold via ETFs are significantly more likely to add Bitcoin to their investment portfolio than the segment of the gold market that buys physical gold.”

Do you see a future in Bitcoin ETFs? How would they affect Bitcoin itself? Let us know in the comments section below!

Images courtesy of wsj.com, moneymorning.com

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