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The Securities and Exchange Commission’s (SEC) postponement in reaching a decision regarding the approval of a spot Bitcoin (BTC) exchange-traded fund (ETF) in the United States is heightening anticipation that a conclusive ruling will be issued in a group that includes significant entities on Wall Street, such as BlackRock and Fidelity.
"There is considerable pressure on the SEC to authorize several of these ETFs, especially since the approved Futures-backed products are significantly underperforming compared to spot prices, which is detrimental to investors,” remarked markets expert and CoinRoutes co-founder Dave Weisberger to Cointelegraph, noting that all pending submissions are expected to be part of a final resolution.
The SEC is currently reviewing a total of eight applications for a spot Bitcoin ETF, following previous delays and rejections of the cryptocurrency product in recent years. The companies awaiting a decision include Ark and 21Shares, Bitwise, BlackRock, VanEck, WisdomTree, Invesco, Galaxy Digital, Fidelity, and Valkyrie. Collectively, these firms oversee more than $15 trillion in global assets.
On August 11, the U.S. markets regulator initiated a 21-day comment period for the ARK 21Shares Bitcoin ETF. According to the filing, the SEC is looking for insights on whether the ARK 21Shares proposal is structured to prevent fraudulent and manipulative actions, as well as whether the Bitcoin market is vulnerable to manipulation.
Additionally, the regulator expressed concerns regarding Coinbase’s surveillance-sharing agreement, requesting commenters to assess whether Coinbase’s involvement in the ETFs surveillance would indeed assist in detecting, investigating, and deterring fraud and manipulation in Bitcoin’s pricing.
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"The SEC’s primary concern regarding spot crypto ETFs is the potential for market manipulation by a large entity. In theory, this could occur if the SEC approves the ETFs of one or two investment funds. However, if it opts to register all eight ETFs, it would significantly reduce the likelihood of manipulation, as these firms would frequently trade with one another, taking opposing positions,” explained Ruslan Lienkha, chief of markets at YouHodler.
SEC application timeline for a spot Bitcoin ETF. Source: Bloomberg Intelligence/James Seyffart
The delay had a minimal effect on Bitcoin’s price, which remained around the $30,000 level at the time of this report. Mauricio Di Bartolomeo, co-founder of the crypto lending platform Ledn, stated that traders and investors are "anticipating that the SEC will take as much time as possible," with the current decision having a limited impact "in terms of market expectations."
The SEC still has two deadlines to meet before a final ruling is made. The third deadline for the ARK 21Shares application is set for January 202. Valkyrie has the most recent application pending, with two upcoming deadlines in January and March of the following year.
The outcome of the BTC ETF could transform the crypto investment environment. According to Lienkha, an approval could potentially inject over $70 billion in liquidity into the Bitcoin market. "The ability to invest in Bitcoin through ETFs will provide regular investors with greater confidence, as they won’t need to delve into all the technical intricacies and assess potential risks independently,” he noted.
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