The Securities and Exchange Commission is playing hard to get. Less than one day after the agency roundly rejected nine proposals for a bitcoin exchange traded fund—citing the currency’s instability—it has discreetly opted to “review” its decision. But like all flaky lovers, the Commission may yet backtrack once more.
Nevertheless, crypto-pundits have already sped through several stages of grief. In the denial corner is the Yoda of Bitcoin, Andreas Antonopoulos, who says that ETFs are a “terrible idea.” He argues that though the exchanges will indeed bring into the ecosystem scads of institutional money, the new fund managers will gain disproportionate control over what was intended to be a decentralized market.
In the anger camp, meanwhile, there were cries of insider trading and market manipulation. Red-faced Redditors say that the SEC's initial pique was motivated by derivatives exchange Bitmex, which had temporarily halted trading Wednesday to do maintenance work. The halt coincided with an abrupt surge in bitcoin's price. Though not referencing BitMex by name, the SEC admonished “unidentifiable participants” for having outsize influence on the markets.
Across the board, there's concern that concentrated mining power unduly affects prices, intentionally or otherwise. And it will only get worse. The Bitcoin Cash network saw a mysterious seven percentage-point spike in mining activity over the past week—even as graphics-card maker-cum mining-hardware-card maker Nvidia, says it is decamping the mining business altogether. The industry titan had enjoyed a brisk and unexpected boom in selling its graphics cards to home miners in 2017. But citing declining revenue —it had projected a drop to $100 million but ended up at $18 million—Nvidia now says it is “looking forward to essentially no cryptocurrency.”
Mining giant BitMain, meanwhile, which accounts for around 40 percent of the Bitcoin hashrate, is taking its own consolidation of power to unsettling places, demanding the personal details of its customers. “How is this supposed to help decentralization when contributors of hashing power can be identified by the government agencies?” thunders Redditor "rage_prone.” Rage_prone, darling, you’re not supposed to publicly admit you’re just in this to subvert the government.
It’s hardly a surprise that people are looking for a glimmer of hope in Bakkt, the upcoming New York Stock Exchange-backed trading platform (read our coverage). Michael Strutton, an analyst at research firm Ironwood.io, argues that Bakkt will reduce bitcoin’s price volatility and lure mainstream investors.
Maybe. Maybe not: Forbes' Bitcoin analyst Caitlin Long fears Bakkt will force users to store bitcoin as collateral in a centralized vault, a Wall Street practice known as “commingling.” That, she argues is as "antithetical to how bitcoin works" as it is "integral to how Wall Street works."
Yet with mining pools continuing their grave forward march, maybe the grubby hands of those Wall Street bankers could keep bitcoin clean.