The journey to a potential Bitcoin ETF has so far been long and arduous. But some key decisions in the race are likely coming this week as crypto faithful await to see how things play out this time.
The US Securities and Exchange Commission is expected to respond to filings from Bitwise, BlackRock, VanEck, WisdomTree and Invesco right before the Labor-Day weekend, according to Bloomberg Intelligence. Regulators can reject, approve or delay. Bitwise’s application is set for consideration by Friday, with the others due the following day, making it likely the SEC will weigh in before the weekend.
Analysts and industry observers anticipate the SEC to once again punt on making a decision. The regulator had already in early August dealt a delay to 21Shares for its spot-Bitcoin application with ARK Investment Management, and has prior to that denied numerous applications over the past decade.
“We can expect to see more delays from the SEC especially after they already delayed their decision earlier this month on ARK’s spot-Bitcoin ETF filing,” said Roxanna Islam, associate director of research and head of sector and industry research at VettaFi. “We need to see a decision from the SEC on Grayscale’s lawsuit first — otherwise, we might see them approve Ether-futures ETF filings before they approve any spot-Bitcoin ETF filings.”
The SEC last year rejected Grayscale Investments’ plan to convert its Bitcoin trust to an ETF, saying crypto markets are too ripe for fraud and manipulation. Grayscale sued, asking the DC Circuit Court of Appeals to overturn a decision the company called arbitrary and discriminatory because the SEC had already approved ETFs that track Bitcoin futures.
Many in the crypto community — and fans outside of it — have been longing for a spot-Bitcoin ETF for years. They argue that it would not only make investing in Bitcoin more accessible to everyday investors, but that it would also help bring digital assets closer to traditional financial markets.
On the other hand, regulators have consistently cited fraud and manipulation as some of the reasons not to approve such a product. Gemini, founded by brothers Tyler and Cameron Winklevoss, was the first firm to try for a physically backed Bitcoin ETF with a 2013 filing. It was rejected by the SEC, as have multiple attempts by other issuers.
“To the extent the SEC can delay its decisions, I think it will until there’s a court ruling in Grayscale,” said Elliott Stein, senior litigation analyst at Bloomberg Intelligence. He places the odds of Grayscale winning a ruling vacating the SEC’s rejection order at 70%.
BlackRock Inc. kicked the race for a spot-Bitcoin fund into high gear when it filed in June. The asset manager has a near-pristine track record of getting ETFs off the ground, which pushed some analysts to posit that this time, the applications — from BlackRock and others — might have a stronger chance of getting approved.
And the recent excitement over the potential for a fund has emboldened companies to not only try their hand at Bitcoin ETFs but more exotic vehicles as well. A number of firms have submitted paperwork for Ether-futures or Bitcoin-and-Ether-futures-medley funds. The SEC is poised to allow the Ether-futures funds to start trading in October in what many say could be seen as an industry win, Bloomberg News reported.
Bitcoin on Monday traded around $26,100, after having reached nearly $31,000 in mid-July. The largest digital-asset traded at a all-time high of almost $69,000 in late 2021.