US SEC Delays BlackRock and Other Spot Bitcoin ETF Applications
The SEC will have an additional 45 days after the publication in the Federal Register to evaluate the suggested rule. The next decision is pending on October 17, next month.
On Thursday, August 31, the US Securities and Exchange Commission (SEC) delayed its decision on bringing the first spot Bitcoin ETF into the market that invests directly into BTC. The development comes soon after the SEC faced a crushing defeat against Grayscale earlier this week. The SEC has delayed a decision on a total of seven proposals including those submitted by BlackRock, WisdomTree, VanEck, Valkyrie, Bitwise, and others. Currently, the US SEC has delayed the decision on spot Bitcoin ETF applications up to October 17, in the next month.
Spot Bitcoin ETF Applications
The SEC will have an additional 45 days after the publication in the Federal Register to evaluate the suggested rule modifications permitting the listing of these investment products. This extension grants the regulatory body until October to make a decision, whether it’s approval, denial, or a further delay.
SEC Chair Gary Gensler has consistently defended his stance against ETFs. He cited the need to safeguard investors from some fraudulent activities in the crypto space. Referring to the proposed WisdomTree fund, the US SEC noted:
“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.”
This decision follows a significant win for Grayscale Investments against the SEC. A federal appeals court overturned the SEC’s rejection of Grayscale’s request to transform its Bitcoin trust into an ETF on Tuesday. Also, the court deemed SEC’s denial as “arbitrary and capricious” in the ruling, primarily because the commission didn’t provide a clear explanation for its divergent treatment of comparable products. In 2021, ETFs holding Bitcoin futures received approval.
BTC Price Tanks Over 4.5% after SEC’s Delay
The Bitcoin price has come crashing down by more than 4.66% falling under the $26,000 level today. With this, Bitcoin loses all its gains made after the Grayscale victory as it lacks sufficient catalyst to move forward.
However, the Grayscale’s victory has improved the odds of approval of spot Bitcoin ETF. Bloomberg analysts stated that there is a 75% chance that a spot Bitcoin ETF will come into the US market this year in 2023. The odds have improved to 95% by the end of 2024.
Supporters of cryptocurrencies have long contended that introducing a “spot fund” would offer advantages to investors and serve as a bridge between the crypto sector and traditional finance. The idea behind such a product was to simplify access to cryptocurrencies for money managers handling client investments. Furthermore, it would also reflect a sign of maturation for the relatively young crypto industry, which has faced skepticism and regulatory challenges since its inception.
Several analysts also believe that a spot Bitcoin ETF would lead to institutional inflows worth billions of dollars in the market.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
