Quiver Quantitative - The US Securities and Exchange Commission (SEC) has once again postponed its decision on approving the first US exchange-traded fund (ETF) that directly invests in Bitcoin. This decision came as a disappointment to industry advocates, especially after a recent court ruling seemed to pave the way for such a product. The SEC's hesitation, notably towards filings from major firms such as Invesco (IVZ), Valkyrie, Fidelity, and WisdomTree (WT), stems from concerns about protecting investors from an industry the SEC Chair, Gary Gensler, deems vulnerable to fraud. This delay followed a significant victory for Grayscale Investments when a federal appeals court overturned the SEC's denial of Grayscale's application to turn its Bitcoin trust into an ETF.
The court's decision, which deemed the SEC's rejection as "arbitrary and capricious", highlighted the inconsistencies in the treatment of similar products, pointing out that Bitcoin futures-based ETFs were approved back in 2021. Moreover, the SEC is expected to address another application from Bitwise shortly and will also have to review filings from renowned firms, BlackRock (NYSE:BLK) and VanEck. In light of the court's decision, Bitcoin experienced a rally but later witnessed a decline, currently priced at around $26,100, significantly below its all-time high from 2021.
The SEC's recent delays aren't isolated events. Less than a month prior, the SEC also postponed a decision on a product from 21Shares and ARK Investment Management (ARKK). Proponents of the cryptocurrency industry argue that the introduction of a direct Bitcoin ETF, or "spot fund", would be a significant leap towards integrating the crypto sector with conventional finance. They believe that it would not only benefit investors but also establish a stronger foothold for the industry in the traditional finance realm, reflecting its maturity and potential for growth.
The anticipation and excitement around the potential approval of a spot-Bitcoin product are palpable. With industry experts projecting that these funds could amass tens of billions of dollars, the involvement of Wall Street giants like BlackRock (BLK), Invesco, and Fidelity has sparked hope. Especially as BlackRock's impressive track record with ETFs has many speculating that its entry might signal a forthcoming debut in the Bitcoin ETF space.
This article was originally published on Quiver Quantitative