A new bitcoin ETF application submitted to the SEC may have just the right stuff for approval.

Several applications for bitcoin ETFs, scratch that, MANY applications for bitcoin ETFs have been submitted to the SEC over the past 2 years.

Every single one of them has been rejected by the SEC.

However, this time it might be different...

Van Eck Associates Corp. and SolidX Partners Inc. filed a request to list a Bitcoin-linked ETP (exchange traded product), which is basically the same thing as an ETF, to the U.S. Securities and Exchange Commission on Wednesday.

Why could this time be different?

The SEC claimed, in the past, that they had some concerns about the spot markets of bitcoin being unregulated and ETFs being tied to those markets.

However, this application says that prices will be tied to an index that tracks over-the-counter trading by U.S.-based institutions, which are regulated by the U.S. Commodity Futures Trading Commission.

The hope is that by tying prices to prices of regulated OTC trades, they can satisfy one of the SEC's main concerns.

They also will be gearing the fund towards institutinoal investors as opposed to retail investors which was another SEC concern.

The product will be priced at $200k per share, it will be fully insured on a 1 to 1 basis, and it will use cold storage for it's holdings, meaning keys will be kept off line.

Why this is interesting to me:

This product, if approved, is going to be physically backed with the coins.

Meaning that for every bitcoin ETP you can purchase, the fund will have one bitcoin in storage.

This is very different than the futures products that currently exist and also different than many of the other bitcoin ETFs that have been proposed.

This could really drive prices for bitcoin skyward if a couple of these funds take off.

Similar to what happened to the gold market when a couple large gold ETFs launched. The demand for gold shot up and prices soared.

(Source: http://www.businessinsider.com/chart-of-the-day-how-etfs-took-the-gold-market-hostage-and-wont-let-go-2010-3)

Think ETFs didn't have much of an impact on prices?

The price of gold was around $300 when the first one launched in 2003 and rose to roughly $1,900 by 2011.

Currently gold trades for roughly $1,300 per ounce.

I would expect to see something very similar if a couple physically backed bitcoin ETFs/ETPs get approved and begin trading.

In my opinion it is only a matter of time before one eventually gets approved, and I would not be surprised if this one does.

Over time it will be available to retail investors as well, which will really get prices moving.

More about this proposed bitcoin ETP can be found here:

https://www.bloomberg.com/news/articles/2018-06-06/bitcoin-etf-dreams-kept-alive-with-new-solidx-vaneck-sec-filing

Stay informed my friends.

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