The Securities and Exchange Commission’s (SEC) delay in deciding whether to approve a spot Bitcoin exchange-traded fund (ETF) in the United States is fueling hopes that a final verdict will come in a batch that includes key Wall Street players including BlackRock and Fidelity.
“There is enormous pressure on the SEC to approve a number of these ETFs, particularly because the approved futures-backed products lag significantly behind spot performance, which hurts investors,” Dave Weisberger, markets veteran and co-founder of CoinRoutes, told Cointelegraph, adding that all pending applications will likely be included in a final decision.
The SEC is analyzing a total of eight applications for a spot Bitcoin ETF, following delays and denials of the crypto product over the past several years. The companies awaiting a decision are ARK Invest and 21Shares, Bitwise, BlackRock, VanEck, WisdomTree, Invesco and Galaxy Digital, Fidelity and Valkyrie. Together, the companies manage more than $15 trillion in global assets.
On August 11, the US markets regulator opened a 21-day comment period for the ARK 21Shares Bitcoin ETF. According to the filing, the SEC is investigating whether ARK 21Shares’ proposal is designed to prevent fraudulent and manipulative acts and practices, as well as whether the Bitcoin (BTC) market is susceptible to manipulation.
Additionally, the regulator raised concerns about Coinbase’s surveillance sharing agreement, asking commenters to consider whether Coinbase’s participation in ETF surveillance would, in fact, help detect, investigate, and deter fraud and manipulation of the Bitcoin price.
“The SEC’s main concern regarding spot crypto ETFs is potential market manipulation by a large whale. Theoretically, this can happen if the SEC approves the ETFs of one or two investment funds. But if it decides to register all 8 ETFs, this will significantly reduce the likelihood of manipulation, as these companies will be able to trade frequently among themselves, taking opposing sides,” explained Ruslan Lienkha, head of markets at YouHodler.
SEC Application Timeline for a Spot Bitcoin ETF. Source: Bloomberg Intelligence/JAmes Seyffart
The delay had a lesser impact on the price of Bitcoin, hovering around the $30,000 mark at the time of writing. According to Mauricio Di Bartolomeo, co-founder of crypto lending platform Ledn, traders and investors “expect (the SEC) to take as much time as possible,” with today’s decision having little impact “in terms of market expectations.”
The SEC still has two deadlines before a final decision is made. The third deadline for the ARK 21Shares application is January 2024. Valkyrie has the latest application online, with two upcoming deadlines in January and March next year.
The BTC ETF outcome could reshape the crypto investing landscape. According to Lienkha, approval could potentially bring over $70 billion in liquidity to the Bitcoin market. “The possibility of investing in Bitcoin through ETFs will give more confidence to regular investors, because with the help of a professional, they will not have to delve into all the technical details and analyze potential risks themselves,” he noted.
Review: Should we take the “orange pill” for children? The case of Bitcoin children’s books
