The U.S. Securities and Exchange Commission (SEC) recently announced the postponement of its decision regarding the Global X Bitcoin Trust's application to list a spot bitcoin exchange-traded fund (ETF). This delay, revealed on November 17, 2023, adds to the ongoing uncertainty surrounding spot bitcoin ETFs.
Global X Spot Bitcoin ETF Delayed by SEC
The Global X Bitcoin Trust aims to provide investors with exposure to bitcoin (BTC) through an ETF structure, potentially expanding the appeal of this crypto asset to a broader base of investors. Initially filed by the Cboe BZX Exchange on August 4, 2023, the proposal seeks to list and trade shares of the trust under the exchange's rules for commodity-based trust shares.
SEC's Rationale for the Delay
The SEC explained the reasons behind the delay in its order, stating the need for further analysis to determine if the proposed ETF meets the requirements of the Securities Exchange Act. The commission is particularly assessing the compatibility of the proposal with the Act's mandates, which include preventing fraudulent and manipulative acts and practices, as well as protecting investors and public interest.
The SEC's concerns primarily revolve around the liquidity and transparency of the BTC market and its vulnerability to manipulation. The commission's proceedings will allow for additional public input and a comprehensive evaluation of these concerns. In the order, the SEC invites the public to provide comments on whether they agree with the exchange's statements regarding the bitcoin market's resistance to price manipulation.
Reviewing the Exchange's Statements and Trust Structure
A crucial aspect of the SEC's review is examining the adequacy of the exchange's statements supporting the proposal, as well as the overall structure and safeguards of the proposed Trust. The trust's objective is to replicate bitcoin's price performance, deducting the trust's operational expenses. Its primary assets will consist of BTC held by its custodian. The SEC is also scrutinizing the Trust's unique mechanism of "in-kind" transactions for selling or redeeming shares.
SEC's Decision and Public Comments
The SEC's decision to delay does not indicate a final disapproval. The regulatory body actively encourages interested parties to submit their views, data, and arguments by opening a public comment period. The SEC will have another 35 days to decide on the Global X filing, and the public can provide comments during this time.
The SEC's postponement of the decision regarding the Global X Bitcoin Trust's spot bitcoin ETF application reflects the ongoing uncertainties surrounding the approval of such ETFs. As the commission continues its evaluation, the public has the opportunity to contribute their thoughts and opinions on this matter.
What are your thoughts on the SEC's delay? Feel free to share your opinions in the comments section below.
Frequently Asked Questions
Can I buy gold using my self-directed IRA
You can purchase gold with your self-directed IRA, but you must first open an account at a brokerage firm like TD Ameritrade. You can also transfer funds from an existing retirement fund.
Individuals can contribute as much as $5,500 per year ($6,500 if married filing jointly) to a traditional IRA. Individuals can contribute up $1,000 per annum ($2,000 if they are married and jointly) directly to a Roth IRA.
You might want to purchase physical bullion, rather than futures contracts if you are going to invest in gold. Futures contracts are financial instruments that are based on gold's price. They let you speculate on future price without having to own the metal. However, physical bullion is real gold or silver bars you can hold in your hands.
How much of your portfolio should be in precious metals?
Before we can answer this question, it is important to understand what precious metals actually are. Precious metals refer to elements with a very high value relative other commodities. This makes them extremely valuable for trading and investing. Today, gold is the most commonly traded precious metal.
However, many other types of precious metals exist, including silver and platinum. The price for gold is subject to fluctuations, but stays relatively stable in times of economic turmoil. It is also relatively unaffected both by inflation and deflation.
As a general rule, the prices for all precious metals tend to increase with the overall market. But they don't always move in tandem with one another. The price of gold tends to rise when the economy is not doing well, but the prices of the other precious metals tends downwards. Investors expect lower interest rate, making bonds less appealing investments.
Contrary to this, when the economy performs well, the opposite happens. Investors choose safe assets such Treasury Bonds over precious metals. Because they are rare, they become more pricey and lose value.
To maximize your profits when investing in precious metals, diversify across different precious metals. Because precious metals prices are subject to fluctuations, it is best to invest across multiple precious metal types, rather than focusing on one.
What is the Performance of Gold as an Investment?
The supply and the demand for gold determine how much gold is worth. Interest rates also have an impact on the price of gold.
Due to their limited supply, gold prices fluctuate. Physical gold is not always in stock.
What is the tax on gold in Roth IRAs?
Investment accounts are subject to tax based only on their current value and not the amount you originally paid. Any gains made by you after investing $1,000 in a stock or mutual fund are subject to tax.
You don't pay tax if you have the money in a traditional IRA/401k. You pay taxes only on earnings from dividends and capital gains — which apply only to investments held longer than one year.
The rules that govern these accounts differ from one state to the next. Maryland requires that you withdraw funds within 60 business days after reaching the age of 59 1/2. You can delay until April 1st in Massachusetts. New York offers a waiting period of up to 70 1/2 years. To avoid penalties, plan ahead so you can take distributions at the right time.
How much money should I put into my Roth IRA?
Roth IRAs allow you to deposit your money tax-free. These accounts cannot be withdrawn until you turn 59 1/2. You must adhere to certain rules if you are going to withdraw any of your contributions prior. First, your principal (the original deposit amount) cannot be touched. No matter how much money you contribute, you cannot take out more than was originally deposited to the account. You must pay taxes on the difference if you want to take out more than what you initially contributed.
The second rule is that you cannot withdraw your earnings without paying income taxes. You will pay income taxes when you withdraw your earnings. Let's assume that you contribute $5,000 each year to your Roth IRA. Let's also assume that you make $10,000 per year from your Roth IRA contributions. The federal income tax on your earnings would amount to $3,500. This leaves you with $6,500 remaining. This is the maximum amount you can withdraw because you are limited to what you initially contributed.
The $4,000 you take out of your earnings would be subject to taxes. You'd still owe $1,500 in taxes. You'd also lose half the earnings that you took out, as they would be subject to a second 50% tax (half of 40%). So even though your Roth IRA ended up having $7,000, you only got $4,000.
There are two types if Roth IRAs, Roth and Traditional. A traditional IRA allows you to deduct pre-tax contributions from your taxable income. You can withdraw your contributions plus interest from your traditional IRA when you retire. You can withdraw as much as you want from a traditional IRA.
Roth IRAs don't allow you deduct contributions. However, once you retire, you can withdraw your entire contribution plus accrued interest. There is no minimum withdrawal amount, unlike traditional IRAs. Your contribution can be withdrawn at any age, not just when you reach 70 1/2.
What are the advantages of a IRA with a gold component?
The benefits of a gold IRA are many. It's an investment vehicle that lets you diversify your portfolio. You control how much money goes into each account and when it's withdrawn.
You also have the option to transfer funds from other retirement plans into a IRA. If you are planning to retire early, this makes it easy to transition.
The best part? You don’t need to have any special skills to invest into gold IRAs. They are offered by most banks and brokerage companies. Withdrawals can happen automatically, without any fees or penalties.
There are, however, some drawbacks. Gold is known for being volatile in the past. Understanding why you invest in gold is crucial. Are you looking for safety or growth? Are you trying to find safety or growth? Only once you know, that will you be able to make an informed decision.
If you plan to keep your gold IRA indefinitely, you'll probably want to consider buying more than one ounce of gold. One ounce doesn't suffice to cover all your needs. Depending upon what you plan to do, you could need several ounces.
You don't need to have a lot of gold if you are selling it. Even a single ounce can suffice. These funds won't allow you to purchase anything else.
What are the pros and cons of a gold IRA?
An Individual Retirement Account is a more beneficial option than regular savings accounts. You don't pay taxes on any interest earned. This makes an IRA a great choice for people who are looking to save money but don’t want to pay any tax on the interest earned. But, this type of investment comes with its own set of disadvantages.
You may lose all your accumulated savings if you take too much out of your IRA. Also, the IRS may not allow you to make withdrawals from your IRA until you're 59 1/2 years old. You will likely have to pay a penalty fee if you withdraw funds from an IRA.
The downside is that managing your IRA requires fees. Many banks charge between 0.5%-2.0% per year. Other providers charge monthly management costs ranging from $10-50.
If you prefer to keep your money outside a bank, you'll need to purchase insurance. Many insurers require that you own at least one ounce of gold before you can make a claim. Insurance that covers losses upto $500,000.
If you choose to have a gold IRA you will need to establish how much gold to use. You may be limited in the amount of gold you can have by some providers. Some providers allow you to choose your weight.
You'll also need to decide whether to buy physical gold or futures contracts. Futures contracts for gold are less expensive than physical gold. Futures contracts allow you to buy gold with more flexibility. You can set up futures contracts with a fixed expiration date.
You will also have to decide which type of insurance coverage is best for you. The standard policy doesn’t provide theft protection or loss due fire, flood, or earthquake. It does include coverage for damage due to natural disasters. If you live in a high-risk area, you may want to add additional coverage.
Additional to your insurance, you will need to consider how much it costs to store your gold. Insurance doesn't cover storage costs. For safekeeping, banks typically charge $25-40 per month.
To open a IRA in gold, you will need to first speak with a qualified custodian. A custodian keeps track of your investments and ensures that you comply with federal regulations. Custodians cannot sell your assets. They must instead keep them for as long as you ask.
Once you've decided which type of IRA best suits your needs, you'll need to fill out paperwork specifying your goals. Your plan should include information about the investments you want to make, such as stocks, bonds, mutual funds, or real estate. Also, you should specify how much each month you plan to invest.
After filling in the forms, please send them to the provider. Once the company has received your application, they will review it and send you a confirmation email.
When opening a gold IRA, you should consider using a financial planner. A financial planner is an expert in investing and can help you choose the right type of IRA for you. They can also help you lower your expenses by finding cheaper alternatives to purchasing insurance.
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Are You a Good Candidate for a Gold IRA
- What are the Options? Types, Spreads, Example, and Risk Metrics
- 7 U.S. Code SS 7 – Designation of boards of trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement funds
- Saddam Hussein's InvasionHelped Uncage a Bear In 1991 – WSJ
- Are you interested in keeping gold in your IRA at-home? It's not exactly legal – WSJ
Guidelines for Gold Roth IRA
Starting early is the best way to save for retirement. Start saving as soon and as often as you're eligible (usually around 50 years old) and keep going until retirement. To ensure sufficient growth, it is vital that you contribute enough each year.
You can also take advantage of tax-free savings opportunities like a traditional 401k (k), SEP IRA (or SIMPLE IRA). These savings vehicles allow you to make contributions without paying taxes on earnings until they are withdrawn from the account. This makes them great options for people who don't have access to employer matching funds.
It is important to save consistently over time. You may not be eligible for any tax benefits if your contribution is less than the maximum allowed.
By: Jamie Redman
Title: The SEC Postpones Decision on Global X Bitcoin Trust's Spot Bitcoin ETF
Sourced From: news.bitcoin.com/sec-postpones-verdict-on-global-x-spot-bitcoin-etf-cites-market-manipulation-concerns-and-need-for-public-insight/
Published Date: Sat, 18 Nov 2023 19:00:28 +0000