Thu. Sep 21st, 2023
More Bitcoin ETF decisions are already on the horizon after the ruling was rejected by the SEC

(Bloomberg) — Bitcoin ETF candidates were hit with another dose of disappointment when US regulators on Friday asked them to decide on such a product. But the next time they hear about something, it may only be a few weeks away.

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The US Securities and Exchange Commission needs to reach a conclusion on the Bitwise Bitcoin ETP Trust by September 1, according to a Bloomberg Intelligence tally. Regulators can refuse, approve or delay. Decisions on orders from BlackRock, VanEck, WisdomTree and Invesco are due just one day later, with others to follow closely.

Cryptocurrency followers are keeping tabs on dates because this time, unlike previous attempts, an exchange-traded fund that invests directly in Bitcoin could receive the regulatory green light. In particular, many were elated at the fact that BlackRock, the asset management powerhouse, had thrown its name into the race — it has a near-original track record of launching ETFs.

However, the path to a potential instant fund was neither easy nor quick.

“We fully expect delays in those decisions as well,” said James Seifart, an analyst with Bloomberg Intelligence. “The only thing that could change that view is if we get a decision in Grayscale’s lawsuit against the SEC, and even then, we’ll likely see a delay in those deadlines as well.” Grayscale is suing the Securities and Exchange Commission as it attempts to convert its bitcoin trust into an ETF.

Many in the cryptocurrency community — and fans outside of it — have been craving a Bitcoin spot ETF for years. They argue that this will not only make investing in Bitcoin more accessible to ordinary investors, but will also help bring the digital asset space closer to traditional financial markets. On the other hand, regulators have consistently cited fraud and manipulation as one of the reasons for not approving such a product. Gemini, founded by brothers Tyler and Cameron Winklevoss, was the first company to attempt to create a physically backed Bitcoin ETF with a filing in 2013. It was rejected by the SEC.

But the recent excitement has encouraged issuers to not only try their hand at Bitcoin ETFs but more exotic vehicles as well. A number of companies have offered securities for Ether futures or Bitcoin and Ether futures funds. No such ETFs are currently traded in the US, and the US Securities and Exchange Commission earlier this year rejected attempts by Ether futures ETFs.

Another positive sign the SEC is softening its stance towards crypto ETFs could be the launch of the 2x Bitcoin (BITX) Volatility Stock Trading Strategy, according to the Coinbase Bytes newsletter. This fund debuted in June and has raised more than $20 million in assets. It was the first of its kind to start trading.

The SEC initially has 45 days to decide on requests for immediate funding. This is followed by another 45 days, then 90 and then 60 days, for a total of 240. She will have to make a decision within 240 days, Seifart said.

Many market watchers are also expecting another delay in September.

“The basic case for an ETF implementation should be that the administrators will do what they have for years and use all their powers to delay the decision,” said Stéphane Ouellette, CEO of FRNT Financial, an institutional platform focused on digital assets. “Even if these products are eventually approved, it would be very surprising to see them approved in the first place and that they are able to.”

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