July 11, 2018
Please approve this latest ETF filing.
As a hard working, professionally employed American, I have invested in a variety of asset classes, from stocks and bonds via my 401k, to collectibles, and in the last few years, Bitcoin. By carefully managing my assets, of which Bitcoin is an important part, I have been able to grow my net worth as a retail investor class to an accredited investor. Bitcoin has allowed me to diversify my holdings into asset classes I had never considered before. It has allowed me to become a more mature, financially responsible adult. I only hope that the SEC can help to further legitimize and open up this exciting new asset class to even more Americans, and providing true global leadership as Bitcoin has rightfully attracted global attention.
Bitcoin has existed for nearly 10 years now. Several countries have legitimized its use as a payment method and as an asset class. Dell, Microsoft, Overstock, Intuit, Paypal, Valve and many other companies have legitimately accepted Bitcoin at one point or another. However, without clear guidance from the SEC on further regulation and investment options, innovation, speculation, and the overall Bitcoin market remains unstable and volatile while still experiencing explosive year-on-year growth.
Recent remarks from US Commodity Futures Trading Commission (CTFC) Commissioner reveal that other US regulators are realizing that Bitcoin and cryptocurrencies are here to stay:
"Virtual currencies may -- will -- become part of the economic practices of any country, anywhere. Let me repeat that: these currencies are not going away and they will proliferate to every economy and every part of the planet. Some places, small economies, may become dependent on virtual assets for survival. And, these currencies will be outside traditional monetary intermediaries, like government, banks, investors, ministries, or international organizations. We are witnessing a technological revolution. Perhaps we are witnessing a modern miracle."
-- CFTC Commissioner Rostin Behnam on June 4th in New York City at the BFI Summit event titled Fostering Open, Transparent, Competitive, And Financially Sound Markets.
At the moment, thousands of exchanges exist globally, however very few of them have the regulatory esteem such as Fidelity or Goldman Sachs in the US. Coinbase is working towards becoming more regulated in the Bitcoin space, but clear action from the SEC would pave the way for even more established, regulated US exchanges to enter the space and provide stability to a market which has been fraught with hacks and scams for gullible investors.
Custody and insurance, prior SEC concerns, are addressed in this latest proposal. Retail investors are protected by exclusion at this time by limiting the ETF to accredited investors.
A number of positive results could result from approving this ETF:
Innovation in the US cryptospace would increase, likely contributing to further economic growth. Currently, other countries seem the be advancing and taking the lead in this space. We have seen this happen before, for example when Japan took digital technologies to new heights, fueling their economic development.
Institutional funds would enter the space, providing a way to further legitimize and stabilize this new asset class. Several leaders in the economics and finance world accept that Bitcoin is a new asset class that is often non-correlative to the greater global markets. This could provide a serious hedge in future economic uncertainty or collapses. To continue excluding US institutions access to an overall stabilizing asset class is tantamount to self-destruction during times of recession.
Hacks and scams would likely decrease, protecting the retail investor as more and more regulated, legitimate exchanges offering custody and insurance options. ICOs and scamcoins would diminish as the number of legitimate institutions accepted Bitcoin as a truly decentralized, non-governed but smartly-regulated asset class.
Tax revenue and reporting would likely ncrease, as the IRS would have better record keeping and access from legitimate, regulated, established reporting exchanges and institutions.
For a new generation of investor, Bitcoin offers an exciting, cutting edge new asset class that has been shown to incentivize long term investing, or in the vernacular, HODLing. This is an incredibly important phenomenon and departure from prior generations that have generated far more personal debt than savings. Legitimizing a trustless, regulated, pre-programmed, limited supply technological asset class will do more for encouraging and attracting this current and future generations to carefully manage their savings and wealth, not only in Bitcoin, but in a variety of asset classes, including exposure to stocks and bonds. For this current Millennial generation, who largely distrust established financial systems after the 2008 financial crisis and others, legitimizing an asset class that will eventually make its way by adoption through the entire financially system may truly help reestablish trust in an industry that has seriously suffered in the last decade.
In short, approving a Bitcoin ETF can only help stabilize financial markets going forward. For governments, institutions, accredited, and retail investors alike. The benefits of approving a Bitcoin ETF far, far exceed the risks on so many fronts.
Sincerely yours,
Mike Fort