SEC Faces Decision on Bitcoin ETF
The Securities and Exchange Commission (SEC) has until August 13th to approve or reject ARK’s application for a bitcoin exchange-traded fund (ETF). Other organizations, such as BlackRock, Bitwise, VanEck, and WisdomTree, have also filed applications for bitcoin ETFs.
Will the SEC Approve or Delay?
ARK’s application for a bitcoin ETF was published in the Federal Register on May 15th. The SEC has until August 13th to make a decision, but it can extend the deadline up to 240 days. Some experts believe the SEC may delay its response until January 10, 2024, for the ARK application and until March 2024 for the other applications.
Here is a list of the organizations that have filed applications:
- Ark/21 Shares Bitcoin Trust (Filed: 5/15/23, Last possible review: 1/10/24)
- Bitwise Bitcoin ETF Trust (Filed: 7/18/23, Last possible review: 3/15/24)
- BlackRock Bitcoin ETF Trust (Filed: 7/19/23, Last possible review: 3/16/24)
- VanEck Bitcoin Trust (Filed: 7/19/23, Last possible review: 3/16/24)
- WisdomTree Bitcoin Trust (Filed: 7/19/23, Last possible review: 3/16/24)
- Valkyrie Bitcoin Fund (Filed: 7/19/23, Last possible review: 3/16/24)
- First Trust Galaxy Bitcoin (Filed: 7/19/23, Last possible review: 3/16/24)
- Fidelity Wise Origin Bitcoin Trust (Filed: 7/19/23, Last possible review: 3/16/24)
Additionally, Grayscale has filed to convert its Grayscale Bitcoin Trust into a Bitcoin Spot ETF.
Simultaneous Approvals?
Some argue that if the SEC approves one bitcoin ETF, it should approve all the applications at once. Grayscale has made this argument in a recent letter to the SEC, stating that the approval process should be fair and not favor certain organizations.
The Importance of a “Surveillance Sharing Agreement”
The SEC has previously denied spot bitcoin ETF applications due to concerns about fraud and market manipulation. However, the current applications include a “surveillance sharing” agreement with exchanges like Nasdaq and Cboe. This agreement would allow for the sharing of information to reduce the chances of market manipulation and ensure the security of investor assets.
Forcing the SEC’s Hand
Many believe that the SEC will only approve a bitcoin ETF if it is forced to do so. Grayscale’s lawsuit against the SEC over the conversion of its trust to a bitcoin ETF has put pressure on the commission. Bitcoin supporters hope that this legal process will lead to a clear explanation from the SEC about its decisions.
Gaming the Odds
Opinions are divided on whether the SEC will approve a bitcoin ETF. Some, like Ric Edelman, founder of the Digital Assets Council of Financial Professionals, believe that a spot bitcoin ETF will not be approved anytime soon. Others point to recent developments, such as the approval of a leveraged Bitcoin ETF and the increase in ethereum futures ETF applications, as signs of a changing environment.
Bloomberg Intelligence analysts have put the odds of a bitcoin ETF approval at 65%, citing pressure from BlackRock and Democrats as potential factors influencing the SEC’s decision.
Canadian Spot Bitcoin ETF Already in Operation
A spot bitcoin ETF launched in Canada by Purpose Investments has been successful. The ETF has attracted billions of dollars from American investors.
The Need for Clear Crypto Legislation
Critics have highlighted the lack of comprehensive crypto legislation from the SEC, the Commodities Futures Trading Commission, and Congress. They argue that clear rules are necessary to avoid confusion and lawsuits.
Matt Hougan, Chief Investment Officer for Bitwise Asset Management, will discuss these topics on ETF Edge.
