How Soon Can the SEC Approve a Spot Bitcoin ETF?
Speculations are mounting on how soon the U.S. SEC can approve a spot Bitcoin ETF application.
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The possibility of a spot bitcoin exchange-traded fund (ETF) being approved by the Securities and Exchange Commission (SEC) has been a major topic in the crypto community for several years. But it has gained more momentum in recent months as experts believe that an approval is imminent.
JP Morgan analysts say the SEC could approve a spot Bitcoin ETF in the next few months. The bank predicted approval before or by January 10, 2024. This prediction is similar to that of Bloomberg ETF experts Eric Balchunas and James Seyffart, who put the odds of ETF approval this year at 75% and increased it to 95% for 2024.
With about nine applications currently before the SEC, the regulator has not given any definite response on what steps it would take. However, some issuers, including BlackRock, Fidelity, and Ark Invest, have recently filed an updated ETF prospectus. This suggests that the firms are discussing with regulators.
SEC History of Rejections
Several companies, including VanEck, Valkyrie, WisdomTree, Fidelity, Ark Invest, 21Shares, Grayscale, and SkyBridge, have filed proposals for Bitcoin spot ETFs in the past few years.
However, the SEC has rejected those proposals usually after many delays. In all its rejections, the regulator has cited the same concerns about the potential for fraud and manipulation in the underlying Bitcoin market.
Despite denying Bitcoin spot ETF approvals, the regulator has approved futures-based bitcoin ETFs since October 2021, when it first approved ProShares Bitcoin Strategy ETF (BITO).
Interest in Bitcoin Spot ETF High
Although there is no approval yet, interest and optimism remain very high. This was best captured this week when fake news about spot Bitcoin ETF approval circulated. This optimism represents a seismic shift from when all Bitcoin spot ETF applications were expected to be rejected and is due to two major events this year.
The first is the BlackRock application for Bitcoin spot ETF in June. With almost $10 trillion in assets under management, BlackRock's interest in the Bitcoin ETF was enough to get everyone talking. The firm’s almost perfect record of ETF approvals and its introduction of a surveillance-sharing agreement to address fears of market manipulation has also been adopted by other firms.
Another major factor is Grayscale's unanimous victory over the SEC at the Court of Appeal. In August, the court ruled that the SEC's denial of the Grayscale application to convert GBTC to a spot ETF was invalid and criticized the regulator's reasoning. The SEC has decided not to appeal the ruling, further boosting the chances of approval.
Nothing is Certain Yet
However, predicting when the SEC will approve a spot Bitcoin ETF remains difficult. Approval is not 100% certain, too, because the SEC still has the discretion to reject pending applications based on other reasons apart from the ones that the court of appeal has ruled against.
If there is one certain thing, it is that investors won’t mind calling for Santa's help if the SEC fails to approve a spot Bitcoin ETF by Christmas.
