Market experts have assigned a roughly 65% probability that spot Bitcoin ETFs will be approved by the SEC.
The United States Securities and Exchange Commission (SEC), a key regulatory authority in the field of cryptocurrencies, is moving towards the possible approval of a spot cryptocurrency exchange-traded fund (ETF). After years of applications, the recent listing of BlackRock’s application for a Bitcoin ETF has garnered new investor attention.
The SEC has announced an extension of the many pending Bitcoin exchange-traded fund approval decisions through 2024. This move highlights the SEC’s commitment to thoroughly assessing the potential risks and rewards of an ETF. of Bitcoin, considering its potential impact on both. the crypto market and traditional financial systems.
Regulatory Hurdles Around BTC ETF Approvals
One of the main reasons behind the SEC’s cautious stance on spot Bitcoin ETFs is the complex and rapidly changing nature of the crypto market in the US. Regulatory actions taken against major players such as Coinbase Global Inc. (NASDAQ: COIN), Binance, and Ripple Labs Inc. highlight the need for a cautious approach that protects investors and the integrity of the financial system.
One of the challenges facing the approval of spot cryptocurrency ETFs lies in the unique nature of these investment vehicles. ETFs linked to Bitcoin futures offer exposure to the asset without direct ownership, while spot BTC ETFs involve holding the actual asset within a fund.
The SEC’s reluctance to approve a spot Bitcoin ETF may be due to the nature of the investment vehicle. While ETFs linked to Bitcoin futures have been accepted since October 2021, a spot Bitcoin ETF carries a different level of risk due to its direct investment nature.
A futures-linked ETF allows investors to gain exposure to Bitcoin price movements without owning the actual asset. In contrast, a spot Bitcoin ETF would imply that the fund held Bitcoin, raising concerns about custody, security, and market manipulation.
The journey to get a Bitcoin ETF approved by the US SEC has been a long one. Reflecting on the past, Cameron and Tyler Winklevoss were the first to try to list their Bitcoin Trust as a stock product in July 2013, but the SEC rejected their request.
At the time, cryptocurrencies were in their early stages and the regulatory landscape was characterized by uncertainty. Remarkably, market pundits have now assigned a roughly 65% chance that spot Bitcoin ETFs will be approved by the SEC.
Firms Await SEC Bitcoin ETF Decision
A wide range of well-known asset management firms have expressed interest in launching spot Bitcoin ETFs. These firms, including BlackRock Inc. (NYSE: BLK), ARK Invest, Bitwise Asset Management, VanEck, WisdomTree, Invesco, Galaxy Digital, Fidelity and Valkyrie, represent a cross-section of the investment landscape, each bringing their unique perspectives and strategies. and table experience.
Stuart Barton, the founder of Volatility Shares, has offered insight into how the SEC deliberates, suggesting that smaller companies might have an advantage when it comes to getting approval for spot crypto ETFs.
The SEC review process for ETF applications can take up to 240 days, a time frame that has significant implications for companies seeking approval. The decision on the ARK Bitcoin ETF, for example, has been postponed until January 2024 due to this timeline.
For other contenders, decisions may not be issued until March 2024. This extended timeline reflects the SEC’s careful approach and dedication to ensuring thorough evaluations.
By Audy Castaneda
