The race to launch the first spot-traded Bitcoin exchange-traded fund (ETF) in the United States has escalated with the entry of major financial institutions such as BlackRock, Fidelity, and VanEck. While the U.S. Securities and Exchange Commission (SEC) had previously approved a Bitcoin-linked Futures ETF in October 2021, the current focus is on spot Bitcoin ETFs. Following Grayscale’s recent legal victory against the SEC’s review of its spot Bitcoin ETF proposal, many experts believe that the approval of these investment funds is becoming more likely.
BlackRock, the world’s largest asset manager with over $8 trillion in assets under management, filed for a spot Bitcoin ETF on June 15, 2023. The filing surprised both the crypto and traditional finance worlds, as BlackRock’s CEO, Larry Fink, had previously been critical of Bitcoin, calling it an index for money laundering. However, on July 15, 2023, the SEC formally accepted BlackRock’s spot Bitcoin ETF application for review. This move by BlackRock prompted several other institutions to refile their spot Bitcoin ETF applications after previously withdrawing them or facing rejection due to the SEC’s concerns.
WisdomTree, a New York-based asset manager, initially filed for a spot Bitcoin ETF in the U.S. on December 8, 2021, but it was rejected by the SEC in 2022. However, with BlackRock’s entry into the spot Bitcoin ETF race, WisdomTree refiled its application with the SEC on July 19, 2023. Similarly, asset management firm Valkyrie faced rejection from the SEC for its spot Bitcoin ETF proposal in January 2021 but decided to refile its application on June 21, 2023, due to the renewed enthusiasm around spot Bitcoin ETFs.
Other notable applicants for a spot Bitcoin ETF include ARK Invest, VanEck, Fidelity, Invesco Galaxy, Bitwise, and GlobalX. These institutions have all refiled their applications for a spot Bitcoin ETF following BlackRock’s move.
The increased interest and filings for spot Bitcoin ETFs have raised optimism among ETF analysts at Bloomberg, who have raised their expected approval chances for a spot Bitcoin ETF to 75% from 65%. The SEC is currently reviewing the applications but has delayed its decision on all seven applicants. Analysts predict that the SEC may not decide on the ETFs until early 2024 when the final deadlines approach.
The SEC has previously rejected spot Bitcoin ETFs, citing concerns about the size and maturity of the Bitcoin market, price volatility, and inadequate trading surveillance that could leave the market prone to fraud and manipulation. However, with the involvement of major institutions like BlackRock, many experts believe that the chances of a spot Bitcoin ETF being approved are improving.
One of the major obstacles to approving a spot Bitcoin ETF is the regulatory requirement for issuers to have a “surveillance-sharing agreement” with a well-regulated Bitcoin-related market. Such agreements are crucial in ensuring that the SEC can conduct thorough investigations in case of any market irregularities. However, the U.S. needs to establish more regulatory and legal infrastructure to meet the SEC’s requirements for ETF providers to effectively handle asset safety and custody.
Despite the SEC’s concerns, some experts argue that the vulnerabilities of the spot crypto ETF market may not be as significant as assumed. They believe that the SEC’s focus on futures ETFs is driven by the belief that futures markets are already heavily regulated to prevent market manipulation.
Overall, market participants and analysts remain optimistic about the eventual approval of a spot-traded Bitcoin ETF in the United States. The involvement of major financial institutions and the growing interest in these investment products indicate a positive shift towards wider acceptance of cryptocurrencies in traditional finance.
Source link
