What’s happening with Bitcoin ETFs, and will the SEC approve them?
On October 16, the crypto community’s hopes briefly surged upon hearing the news of a Bitcoin ETF approval, only to be dashed when BlackRock denied the information.
Since BlackRock, VanEck, Invesco Galaxy, ARK 21Shares, and other financial industry giants filed applications to create spot Bitcoin ETFs in mid-June, the asset has risen in price by 8%. Over the same period, the second largest cryptocurrency by capitalization, Ethereum (ETH), lost 7.5% in price.
Previously, the SEC has repeatedly rejected applications from other issuers to create such products, citing problems with the crypto market and a lack of investor protection. At the same time, the SEC gave the green light to Bitcoin futures exchange-traded funds, which offer investors access to futures contracts rather than the asset itself. The first was ProShares’ Bitcoin Strategy ETF, which became available to investors on the New York Stock Exchange in October 2021.
Exciting changes are happening on the ETF front. Let’s take a look at the latest news.
Grayscale paves the way to a Bitcoin ETF
On October 13, the US Securities and Exchange Commission (SEC) decided not to appeal the recent court decision in favor of Grayscale Investments. This refers to the rejection of Grayscale’s application to convert their GBTC trust into a spot Bitcoin ETF.
What does it mean? The decision clears the way for Grayscale’s SEC filing to be reexamined. A successful transformation could improve investors’ access to Bitcoin through traditional investment channels, increasing the cryptocurrency’s integration into broader financial circles.
Bloomberg stock analyst James Seyffart believes negotiations between Grayscale and the SEC will begin in the next two weeks.
Grayscale later released a statement confirming its commitment to potentially converting the Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund.
Either way, the progress in the Grayscale case brings further clarity to the ETF approval process, which remains largely opaque to outside observers. One of the key questions remains whether the regulator will allow the launch of several Bitcoin ETFs at once.
The SEC and Grayscale case industry impact
According to CoinShares, investments in crypto funds grew by $15 million last week. The influx of funds continues for the third week in a row. Investments in Bitcoin increased by $16 million, and Ethereum decreased by $7 million. Investments in funds that allow you to open shorts on Bitcoin increased by $1.7 million. Investments in Solana increased by $3.7 million, again significantly ahead of all altcoins.
The data released does not yet reflect positive news from the U.S. that the SEC will not appeal Grayscale’s lawsuit, which potentially opens the way for the approval of spot ETFs in the country, CoinShares noted.
However, the NFT market soared 15% after the SEC’s failure in the Grayscale Bitcoin Trust case. Trading volume reached $9.7 million, and the number of investors increased by 5.9%. Ethereum collections grew by 26.7%, Mythos Chain – by 4.5%, and Solana – by 23.5%. At the same time, 95% of NFTs have no market value.
Is the SEC ready to approve spot Bitcoin ETFs?
Insiders claim that U.S. Securities and Exchange Commission (SEC) chief Gary Gensler has told friends and advisers he wants to approve one or more spot Bitcoin ETFs from major funds. They say the approval of spot Bitcoin ETFs will help Gensler “gracefully emerge from the current situation.” Moreover, he hopes to get a job at one of the large funds after leaving the SEC.
However, Gensler has publicly noted that he is more open to approving BTC futures ETFs than BTC spot ETFs, as the former are regulated by the Commodity Futures Trading Commission (CFTC) and have more investor protections.
Bitcoin ETF applications the SEC is considering
In September, the SEC delayed consideration of a number of applications to create a spot Bitcoin ETF.
The regulator said it needed a “longer period” to evaluate several applications for a spot Bitcoin ETF, including applications from investment giant BlackRock, Wisdom Tree Funds, Invesco, Valkyrie Funds, Fidelity, and VanEck. BitWise, meanwhile, has withdrawn its application to launch the Bitcoin and Ether Market Cap Weight Strategy ETF.
The SEC is currently considering ten spot Bitcoin ETF applications:
- Global X Bitcoin Trust by Global X
- Bitwise Bitcoin ETP Trust from Bitwise
- iShares Bitcoin Trust from BlackRock
- VanEck Bitcoin Trust by VanEck
- WisdomTree Bitcoin Trust (BTCW) by Wisdomtree
- Invesco Galaxy Bitcoin ETF from Invesco & Galaxy
- Wise Origin Bitcoin Trust from Fidelity
- Valkyrie Bitcoin Fund (BRRR) from Valkyrie
- Hashdex Bitcoin ETF from Hashdex
- ARK 21Shares Bitcoin ETF (ARKB) from 21Shares & ARK
On October 16, a scandal erupted in the crypto community due to a report by the cryptocurrency portal Cointelegraph that the US Securities and Exchange Commission (SEC) approved the application of iShares, a division of the investment company BlackRock, to launch a spot Bitcoin exchange-traded fund (ETF) called iShares Bitcoin Trust. This news caused delight among many investors and traders who were counting on the positive effect of such a product on the cryptocurrency market.
However, shortly after Cointelegraph’s tweet was published, another cryptocurrency portal, The Block, denied this information, citing a source inside BlackRock. According to the source, the application for a spot Bitcoin ETF is still pending with the SEC and the company has not received any notification from the regulator about approval or denial. The source also added that the company did not provide any comments to Cointelegraph about its application and did not know the source of this information.
