The Securities and Exchange Commission’s (SEC) delay in deciding whether to approve a Bitcoin Exchange spot fund in the United States is fueling expectations that the final verdict will be delivered in a batch involving key Wall Street players including BlackRock and Fidelity.
“There is tremendous pressure on the SEC to approve a number of these ETFs, especially since the approved futures-backed products lag significantly behind spot performance, which is hurting investors,” market veteran and CoinRoutes co-founder Dave Weisberger told Cointelegraph, adding that all pending applications will likely be included in the final decision.
The SEC is reviewing a total of eight spot Bitcoin ETF applications, following previous delays and denials for the crypto product in recent years. The companies set to make the decision include ARK Invest and 21Shares, Bitwise, BlackRock, VanEck, WisdomTree, Invesco and Galaxy Digital, Fidelity and Valkyrie. The companies collectively manage more than $15 trillion in assets worldwide.
On August 11, the U.S. Markets Regulatory Authority opened a 21-day comment period for the ARK 21Shares Bitcoin ETF. According to filingThe SEC is seeking answers to whether the ARK 21Shares proposal seeks to prevent fraudulent and manipulative acts and practices, as well as whether the Bitcoin (BTC) market is susceptible to manipulation.
Additionally, the regulator expressed concerns about Coinbase’s supervisory sharing agreement, asking commenters to investigate whether Coinbase’s participation in ETF oversight would actually facilitate detect, investigate, and prevent fraud and Bitcoin price manipulation.
“The SEC’s main concern regarding spot cryptocurrency ETFs is potential market manipulation by a large whale. Theoretically, this could happen if the SEC approves the ETFs of one or two mutual funds. But if it decides to register all 8 ETFs, it will significantly reduce the likelihood of manipulation because these companies will be able to frequently trade with each other while standing on opposite sides,” explained Ruslan Lienkha, head of markets at YouHodler.
SEC filing schedule for spot Bitcoin ETF. Source: Bloomberg Intelligence/JAmes Seyffart
The delay had less of an impact on Bitcoin’s price, which was hovering around $30,000 at the time of writing. According to Mauricio Di Bartolomeo, co-founder of lending platform Ledn, investors and traders “expect [the SEC] to devote as much time as they can,” and today’s decision has little impact “from the point of view of market expectations.”
The SEC has two more deadlines to make a final decision. The third application deadline for ARK 21Shares is January 2024. Valkyrie already has the latest application, with the two upcoming deadlines being January and March next year.
The performance of the BTC ETF could change the cryptocurrency investing landscape. According to Lienkha, approval could potentially provide more than $70 billion in liquidity to the Bitcoin market. “The ability to invest in Bitcoin through ETFs will give ordinary investors greater confidence, because thanks to professional help they do not have to delve into all the technical details and analyze potential risks on their own,” he noted.
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