The Securities and Exchange Commission (SEC) is facing mounting pressure to approve a spot Bitcoin exchange-traded fund (ETF) in the United States. The delay in making a final decision on the ETF has led to expectations that it will be part of a larger batch of approvals that includes major players on Wall Street such as BlackRock and Fidelity.
Market veteran and co-founder of CoinRoutes, Dave Weisberger, emphasized the need for the SEC to approve these ETFs, especially since the performance of approved futures-backed products is significantly lagging behind the spot market. This underperformance is hurting investors, which adds to the urgency for a decision. Weisberger believes that all pending applications will likely be included in the final verdict.
Currently, the SEC is evaluating a total of eight applications for a spot Bitcoin ETF. These applications are from prominent companies including ARK Invest and 21Shares, Bitwise, BlackRock, VanEck, WisdomTree, Invesco and Galaxy Digital, Fidelity, and Valkyrie. Collectively, these firms manage over $15 trillion in global assets.
On August 11, the SEC initiated a 21-day comment period for the ARK 21Shares Bitcoin ETF proposal. The regulator is seeking input on whether the proposal effectively addresses fraudulent and manipulative practices. Additionally, the SEC expressed concerns about Coinbase’s surveillance-sharing agreement and its ability to detect and deter fraud and manipulation in Bitcoin’s price.
The SEC’s main concern regarding spot crypto ETFs is the potential for market manipulation by a significant entity. Ruslan Lienkha, chief of markets at YouHodler, explained that if the SEC approves the ETFs of only one or two investment funds, manipulation could occur. However, if all eight ETFs are registered, the probability of manipulation would diminish significantly, as these firms would be able to frequently trade with each other, taking opposing positions.
Despite the delay in approving the ETF, Bitcoin’s price has remained relatively stable around the $30,000 mark. Traders and investors seem to anticipate a prolonged decision-making process by the SEC and, therefore, the latest delay has had a minimal impact on market expectations.
The SEC still has two more deadlines before making a final decision. The third deadline for the ARK 21Shares application is in January 2024. Valkyrie’s application is the most recent and has two upcoming deadlines in January and March of next year.
The approval of a Bitcoin ETF could have a significant impact on the crypto investment landscape. Lienkha believes that an approval could introduce over $70 billion in liquidity to the Bitcoin market. It would also provide regular investors with more confidence, as they would have professional assistance in navigating the investment without having to delve into all the technical details and analyze risks on their own.
In conclusion, the delay in approving a spot Bitcoin ETF by the SEC has fueled expectations that it will be part of a larger batch of approvals that includes major players on Wall Street. The decision on these ETFs is crucial to address the underperformance of futures-backed products and to meet the demands of investors. The SEC is currently evaluating eight applications and has raised concerns about fraudulent practices and market manipulation. Despite the delay, the impact on Bitcoin’s price has been limited. The SEC has upcoming deadlines before reaching a final decision, and the approval of a Bitcoin ETF could reshape the crypto investment landscape by bringing significant liquidity and confidence to regular investors.
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