The U.S. Securities and Exchange Commission delayed its decisions on Bitcoin exchange-traded fund proposals from both Bitwise and Grayscale, both of which are asset management groups.
SEC commissioners have 45 more days to review the Bitwise Bitcoin ETP Trust, as well as the Grayscale Bitcoin Trust proposals, after which they can choose to approve or deny them. Of course, that’s not counting their 3rd option, which is to delay the decision yet again.
Though the agency has yet to approve a Bitcoin spot ETF, it has indeed rejected applications from VanEck and WisdomeTree, and that too in the last six weeks. It also allowed several Bitcoin futures ETFs to begin trading in 2021. These are 2 different matters of course. A Bitcoin ETF would directly tie into the price of BTC on spot exchanges like Coinbase, which is where you’d trade crypto for its current price at the given moment. Bitcoin futures ETFs are tied to derivatives markets as well, one’s that investors use to hedge risk and/or to predict the price direction.
Gary Gensler, SEC Chair telegraphed to firms earlier which would include BTC future ETFs would be getting serious consideration since they’re based on a different law compared to spot ETF proposals: the Investments Company Act of 1940. He said, “When combined with the other federal securities laws, the ’40 Act provides significant investor protections for mutual funds and ETFs.”
However, people including Congressmen Tom Emmer (R-MN) and Darren Soto (D-FL) state bitcoin futures are riskier in the eyes of investors as they have an added layer of complexity despite using the same underlying price data. “We question why, if you are comfortable allowing trading in an ETF based on derivatives contracts, you are not equally or more comfortable allowing trading to commence in ETFs based on spot Bitcoin,” wrote the representatives in an open letter to Chairman Gensler. It also said “Bitcoin spot ETFs are based directly on the asset, which inherently provides more protection for investors.”
Though Emmer, Soto, and others want a Bitcoin ET so badly before the New Year, they’ll have to be patient, as not counting a Christmas miracle it doesn’t seem likely to happen just quite yet. The SEC, however, needs to reach a decision regarding the Kryptoin Bitcoin Trust ETF by the 24th of December.