The cryptocurrency world continues to react with surprise when a Bitcoin ETF proposal is rejected by the SEC. Those with a level head know the SEC will never approve such vehicles without official regulatory guidelines in place. Until something changes, alternative solutions such as Vectorspace AI may offer relief. It is a very different take on ETFs, although it largely serves the same purpose.
The ETF Problem Remains
When it comes to incorporating Bitcoin and cryptocurrencies into traditional finance, a lot of challenges lie ahead. Solving these problems will not be easy in the slightest, and it appears the ETF vehicle will not lend itself to cryptocurrency anytime soon. At least, not until official regulatory measures are put in place.
Vectorspace AI in a Nutshell
With Vectorspace AI, a different type of ETF solution can be explored. Although this project has no major traction to speak of just yet, diversification is an integral part of the cryptocurrency ecosystem. As such, one also has to look beyond the traditional offerings when it comes to new investment vehicles. ETFs are the main focus in the Bitcoin world, yet their chances of being approved are slim to none.
As such, investors and speculators are exploring new horizons. The solution offered by Vectorspace AI has a lot of potential, at least on paper. It offers dynamically generated smart basket ETFs. This is similar to traditional ETFs, as they consist of different cryptocurrencies. However, these smart basket ETFs contain currencies related to trends, topics, and headlines, rather than just going by market cap.
Is it Viable?
The big question is whether or not such “smart baskets” will gain major traction. The relationship scores for the included cryptocurrencies are calculated based on multiple factors including patents, APIs, and scientific literature. That creates a more level playing field for all cryptocurrencies, although that may not necessarily be what investors are looking for. Having more options is never a bad thing, though.
The Road Ahead
It is not unfeasible that the SEC will approve Bitcoin ETFs several years down the line. As of right now, however, that seems increasingly unlikely, as another dozen ETF proposals have been rejected this year alone. It is expected that more proposals will meet a similar fate in the coming months. The lack of official regulation is hurting these proposals, although leading US exchanges are pursuing self-regulation at this stage.