LUCKNOW (CoinChapter.com) — The US Securities and Exchange Commission (SEC) delayed the Bitcoin ETF approval deadline of 2024. This decision comes after years of scrutiny as the SEC grapples with the complexities of integrating the rapidly evolving crypto landscape into traditional financial markets.
BlackRock joined the spotlight in June by filing a Bitcoin ETF application, along with other firms. This move injected new vitality into the debate surrounding crypto ETFs. It also captured the interest of investors both within and beyond the cryptocurrency sphere.
BlackRock further solidified its position by establishing a “surveillance-sharing agreement” with cryptocurrency exchange Coinbase. This strategic maneuver was based on speculation. The SEC might give bitcoin ETF approval to applications if certain conditions, like surveillance-sharing agreements, were met.
Under CEO Cathie Wood’s leadership, ARK Invest entered the race by submitting its ARK 21Shares spot Bitcoin ETF application in May 2023. However, the decision on Bitcoin ETF Approval Delayed by SEC has brought further uncertainty. On Aug 11, the SEC postponed ARK Invest’s application review by an additional 21 days, allowing for public comments on the proposal.
Regulatory Landscape and Challenges on the Path Forward
One significant obstacle lies in the investment vehicle itself. Bitcoin futures-linked ETFs offer exposure to the crypto asset without requiring direct exchange involvement. On the other hand, spot Bitcoin ETFs involve holding actual Bitcoin within a fund for more direct investment.
The journey toward securing SEC approval for a Bitcoin ETF has been lengthy. In July 2013, Gemini co-founders Cameron and Tyler Winklevoss applied for a crypto exchange-traded product listing using their Bitcoin Trust. However, the nascent state of digital currencies then led the SEC to reject their application.
Stuart Barton, co-founder, and chief investment officer of Volatility Shares, revealed the intricate process of engagement with the SEC. Barton noted that smaller firms might hold an edge with the SEC for a spot crypto ETF offering.
Barton said, “Big companies have been doing the same thing they’ve been doing for years.”
He emphasized that while prominent companies have made filings, they haven’t significantly progressed the argument.
Industry Players and Their Prospective Deadlines
Among the asset management giants under SEC scrutiny are Bitwise Asset Management, VanEck, WisdomTree, Invesco, Galaxy Digital, Fidelity, and Valkyrie.
The SEC can extend its review process for ETF applications by up to 240 days. As a result, the final decision on ARK Bitcoin ETF approval was delayed until January 2024. On the other hand, other firms’ offerings could receive approval or disapproval as late as March 2024.
The SEC’s cautious approach towards greenlighting a spot crypto ETF might be influenced by the complex and rapidly evolving nature of the cryptocurrency market in the United States.
This market, while regulated, has prompted calls from legislators and industry leaders for enhanced clarity and oversight. The SEC’s ongoing enforcement actions against Coinbase, Binance, and Ripple reflect this uncertainty.
“Both sides are going to bend a little bit. I think the SEC will have to be a little bit more open-minded […] There’s going to be a lot more bending, I think, from the crypto side.” Barton stated.
The Power Play and the Political Landscape
With legislation in the works to delineate the roles of the SEC and Commodity Futures Trading Commission (CFTC) in regulating digital assets, the regulatory environment is poised for transformation. Notably, the recent SEC vs. Ripple case ruling deemed XRP not to be a security. This echoes the need for better-defined regulations in the crypto space.
Analysts speculate that there is almost to 65% chance of the spot Bitcoin ETF approval by the SEC, partly due to BlackRock’s involvement. Cathie Wood and Grayscale suggested that the SEC might approve multiple ETF applications simultaneously. This strategy aims to ensure fairness and prevent any single company from gaining an undue advantage.
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