- For the SEC, a setback is not the end of the war
- What is a Bitcoin ETF and why is it important?
- The future is unclear
The Securities and Exchange Commission (SEC) has got in the way once again. Despite Grayscale’s legal win against the SEC concerning Bitcoin ETFs, the Commission will defer its decision on the applications from seven companies until the middle of October. The reason is that the SEC faces growing pressure to approve various digital asset ETF products. Its chairman Gary Gensler just cannot come to terms with the loss and continues to stand in the way.
For the SEC, a setback is not the end of the war
On August 31, the Securities and Exchange Commission said that it would defer its decision on the applications from the companies seeking to launch spot bitcoin ETFs which include WisdomTree Inc., Invesco, Valkyrie Funds, Bitwise Asset Management Inc., Fidelity Investments, VanEck, and BlackRock Inc. So far, the decision has been pushed back until the middle of October, but it can be postponed even further.
The SEC claims that it still needs more time to “consider the proposed rule change and the issues raised therein.”
The Commission’s decision has followed its major legal loss versus Grayscale Investments, a digital currency asset management company. On August 29, the federal appeals court ruled that the SEC should review its rejection of the company’s attempt to convert the Grayscale Bitcoin Trust into an ETF. The judges considered the agency’s decision to deny such a conversion “arbitrary and capricious.” This ruling is very important for digital asset ETFs.
What is a Bitcoin ETF and why is it important?
An ETF is an exchange-traded fund. A company buys one or several types of securities and helps investors profit from rate changes. Investors buy shares of ETFs. A Bitcoin ETF is an exchange-traded fund comprised only of Bitcoin.
Crypto-based ETFs provide a solution to crypto legalization issues and revolutionize investment processes:
- An ETF is absolutely legal. Even if an ETF includes only crypto, technically, a buyer invests in the fund itself and not in coins.
- Large companies often invest in ETFs. This is why crypto-based exchange-traded funds can be a great solution for companies with conservative investment strategies.
The SEC and its chairman have always rejected ETFs that track physical bitcoin as opposed to bitcoin futures contracts. The SEC has rejected every proposal it has received since 2021 (over 30 in total).
The future is unclear
The future of a so-called spotcoin is unclear. Although the Commission will have to obey the court’s ruling, it can defer any applications in the future. The Commission can also appeal its loss to Grayscale.
The new deadlines are October 16 for Bitwise, October 17 for Wisdom Tree’s and Fidelity’s Wise Origin Trust, and October 19 for Valkyrie. The SEC could punt its decision for as long as 240 days.
