US regulators gave potential Bitcoin ETF candidates more bad news on Friday by putting off a decision on whether or not to approve such a product. But there could be a silver lining in the near future, as the next message from regulators could come in just a few weeks.
Bloomberg Intelligence says that the US Securities and Exchange Commission is likely to decide on the Bitwise Bitcoin ETP Trust by September 1. During this process, regulators have the power to say no, say yes, or wait to make a decision. The next day, decisions will be made about applications from BlackRock, VanEck, WisdomTree, and Invesco. Decisions about applications from other candidates will come soon after.
Crypto fans are keeping a close eye on these dates because there is a lot of hope that, unlike in the past, an exchange-traded fund that invests directly in Bitcoin might finally get regulatory approval this time. BlackRock’s involvement stands out because it has a good track record of launching ETFs successfully.
Nonetheless, the path to a potential spot fund has neither been simple nor quick.
James Seyffart, an analyst at Bloomberg Intelligence, says that it’s very likely that decisions about these things will take longer than expected. The only thing that could change the game is if Grayscale and the SEC win their lawsuit. Even if that scenario were to occur, authorities would likely extend the decision-making deadlines.
Both people in the crypto community and people outside of it have been eagerly waiting for a Bitcoin ETF for a while now. They say that this would not only make it easier for regular people to invest in Bitcoin, but it would also connect the world of digital assets with the world of traditional financial markets. But regulators have consistently expressed hesitation in approving such a product due to concerns about fraud and manipulation. Gemini, which was started by the Winklevoss brothers in 2013, was the first company to try to make a Bitcoin ETF that was backed by real assets. The SEC turned it down, which was a shame.
Still, the recent rise in interest has led issuers to think about not only Bitcoin ETFs but also other, more creative ways to invest. Many companies have asked for money to help them with Ether futures or a mix of Ether futures and Bitcoin futures. Currently, the US is not trading these ETFs, and earlier this year, the SEC rejected proposals to create Ether-futures ETFs.
The Coinbase Bytes newsletter says that the recent release of the Volatility Shares 2x Bitcoin Strategy ETF (BITX) could be a sign that the SEC will treat crypto ETFs more favorably in the future. This fund started in June and has already amassed more than $20 million. It was the first of its kind to start trading, which is a big deal.
At first, the SEC has 45 days to make a decision about these spot funds’ applications. Seyffart highlighted that after that, authorities will have additional time frames of 45, 90, and 60 days, totaling 240 days, to reach a decision.
A lot of market experts also think there will be another delay in September.
Stephane Ouellette, the CEO of FRNT Financial, an institutional platform that focuses on digital assets, says that the most likely thing to happen with these ETF applications is that the authorities will do what they have always done, which is to use their power to slow down the decision-making process. Even if authorities ultimately approve these products, it would be highly unusual for them to grant approval upon their initial submission.