Bitcoin Spot ETF Approval is Nigh, Grayscale Investments CEO Beckons
Regulators and financial authorities handling matters on cryptocurrencies have constantly taken a harsh stance toward these virtual assets. However, many believe that the SEC’s approval of a spot exchange-traded fund (ETF) for Bitcoin is only a matter of time.
A Matter Of When
One particular believer in this is Michael Sonnenshein, the CEO of Grayscale Investments, who is very optimistic about the future during a recent interview.
The main reason for this optimism is the recent approval of the Teucrium Bitcoin Futures Fund’s application by the Securities and Exchange Commission (SEC). Unlike other futures Bitcoin funds, which Grayscale mainly uses, it filed the fund’s application under the Securities Act.
According to crypto analysts, the new structure of the EFT could allow it to be used in the U.S., which would be a massive step for the crypto community. Despite the fund having already been approved in various countries, such as Brazil and Canada, the SEC has rejected all proposals due to concerns on fraud and manipulation.
Grayscale Investment CEO Sonnenshein noted that “from the SEC’s standpoint, there were several protections that (19)40 Act products have that (19)33 products don’t have, but never ever did those protections address the SEC’s concern over the underlying bitcoin market and the potential for fraud or manipulation.”
According to Sonnenshein, the approval of a 33 Act product by Teucrium has invalidated the argument that the value of bitcoin futures contracts is linked to the underlying spot markets. He added that the Securities and Exchange Commission (SEC) may have violated the administrative procedure act if it couldn’t distinguish between the futures and spot markets.
Regulation Concerns
Last week, an analyst wrote that he was not optimistic about the near-term approval of an ETF for the digital currency bitcoin. He said that U.S. regulators had expressed concerns about unregulated crypto spot exchanges. In addition, they have noted that the promoters of crypto ETFs have not yet argued against concerns about fraud and manipulation.
He noted that it was likely that the agency would continue to reject new applications to approve an exchange-traded fund for the future.
According to analysts at Bloomberg Intelligence, the agency could approve an exchange-traded fund for bitcoin by mid-2023. It would be due to a proposed rule change that would allow cryptocurrency exchanges to be regulated.
Still on the Wait
Grayscale Investments is still waiting for the U.S. Securities and Exchange Commission to approve its application to convert its Bitcoin Trust into an ETF. The firm expects the answer by July; otherwise, it will sue.
The SEC’s refusal to approve a bitcoin exchange-traded fund has been a source of frustration for many investors. In 2022, over 80% of advisors said they would prefer to invest in a spot bitcoin exchange-traded fund instead of a futures-based one.
A recent survey conducted by Nasdaq revealed that over 70% of financial advisors would be more comfortable with investing in cryptocurrencies if there were a spot exchange.
A spot exchange-traded fund would allow investors to track the price of Bitcoin directly. Unlike a futures-based fund, it would also address a larger market. Despite the numerous requests from the industry, the Securities and Exchange Commission has yet to approve a bitcoin ETF, and investors are still waiting.
Even if an exchange-traded fund (ETF) for GBTC is approved, it will still need to be attractive to attract investors. Despite the multiple rallies that occurred last year, GBTC has been slipping. Although Sonnenshein believes that converting to an ETF will lead to the realization of GBTC’s true potential, he also believes that investors will still benefit from its long-term potential.
