The crypto space recently saw a comical blunder. Cointelegraph, a famous blockchain media outlet, posted a tweet claiming that the SEC had approved BlackRock’s iShares Bitcoin spot ETF at 21:21 on October 16 (UTC-5). The claim was later debunked by credible sources, and Cointelegraph also issued a clarification and soon removed the tweet. Nevertheless, this false information dealt a major blow to public confidence in the crypto industry.
Institutional players, investors, and enthusiasts in the crypto industry have been eagerly awaiting the SEC’s approval of a Bitcoin spot ETF, and every new development has had a massive impact on the market. Apart from Cointelegraph, many other institutions and investors are all keeping a close eye on Bitcoin spot ETFs.
Will recent events speed up the approval for a Bitcoin spot ETF? Before we answer that question, let’s first check out what a Bitcoin spot ETF is and the current status of Bitcoin spot ETF applications out there.
Bitcoin Spot ETF Explained
Bitcoin spot ETFs and Bitcoin futures ETFs are both referred to as Bitcoin ETFs. They allow investors to invest in Bitcoin without purchasing any coins. With Bitcoin ETFs, the investment process is simplified, as users can start investing without exchanges or wallets.
BITO, the first Bitcoin futures ETF, made its debut on the New York Stock Exchange (NYSE) on October 19, 2021. While Bitcoin futures ETFs allow users to speculate on the BTC price by agreeing to buy or sell Bitcoin at a specific price on a predetermined date, they do not involve a direct investment in Bitcoin at the spot price. This is one reason why some crypto users believe that Bitcoin futures ETFs cannot provide the “genuine” crypto experience.
A Bitcoin spot ETF offers the same streamlined investment procedures. The difference is that its price performance is directly tied to the real-time value of spot Bitcoin. Therefore, when investors buy a spot ETF, they are essentially buying Bitcoin, even though they do not directly hold the coin.
Existing Bitcoin Spot ETF Applications
Over the past few years, multiple crypto institutions have submitted proposals for Bitcoin spot ETFs to the SEC. However, to date, the SEC has rejected all of these proposals and emphasized concerns about the risk of fraud and market manipulation associated with such assets.
Nonetheless, rejections have not diminished the market’s enthusiasm for a Bitcoin spot ETF. In June this year, BlackRock, a global asset management giant, submitted an application for a Bitcoin spot ETF, prompting crypto institutions to join the race.
As of now, there are over eight Bitcoin spot ETF applications awaiting SEC approval.
How Far Are We From a Bitcoin Spot ETF?
The crypto industry has endured a lengthy path in the quest for Bitcoin ETFs, with many twists and turns. Back in July 2013, the Winklevoss brothers submitted the first Bitcoin ETF listing application, which was rejected by the SEC. Fortunately, with the approval of the first Bitcoin futures ETF (BITO) in 2021, the Winklevoss brothers finally got their Bitcoin ETF after eight years of effort.
Today, the Bitcoin spot ETF is going through a similar process: application, rejection, reapplication, and further rejection or delayed approval. The good news is that with the increasing demand for Bitcoin trading from global institutions and users, the SEC’s attitude toward Bitcoin spot ETFs has shifted from outright rejection to deferred decisions. This shows that the SEC is reevaluating crypto assets, as the regulator starts to take a milder stance on Bitcoin.
According to regulatory guidelines, the SEC has a maximum of 240 days to approve or reject these applications. Looking at the list of pending reviews, the application from Ark & 21 Shares might be the first Bitcoin spot ETF approved or rejected by the SEC next year. If the application receives the go-ahead, then all the other spot ETFs might also be approved.
Perhaps the long race for a Bitcoin spot ETF is nearing its finish line. What changes lie ahead for the crypto market? Let’s stay tuned!