Bitcoin ETF Hopefuls Face Setback as SEC Delays Ruling

Bitcoin ETF SEC

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Fredrik Vold

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Fredrik Vold

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August 14, 2023 15:06 EDT

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Bitcoin exchange-traded fund (ETF) hopefuls have faced a setback as the US Securities and Exchange Commission (SEC) decided to delay their ruling on Ark Invest’s spot Bitcoin ETF application.

Next up now is the Bitwise Bitcoin ETP Trust’s, which the SEC will need to decide on whether to approve, reject or delay by September 1.

That date is followed by decision deadlines for ETF applications from BlackRock, VanEck, WisdomTree, and Invesco just a day later, with others following shortly after.

Crypto enthusiasts and observers are paying close attention to these dates, hoping that this time, unlike previous attempts, a spot Bitcoin ETF could gain regulatory approval.

So far, only ETFs backed by Bitcoin futures contracts have been approved by the SEC, with the agency arguing that the futures market has stronger regulatory oversight than the spot Bitcoin market.

However, the involvement of BlackRock, known for a near-perfect track record when it comes to getting ETF applications approved, has raised hopes that a spot Bitcoin ETF could now finally be approved.

Still, experts Bloomberg spoke with for a recent article agreed that a further delay is the most likely outcome for the next ETF applications on the list following the delay for Ark Invest’s filing.

“We fully expect a delay in those decisions as well,” said Bloomberg Intelligence analyst James Seyffart, while adding:

“The only thing that could possibly change that view is if we get a decision in Grayscale’s lawsuit against the SEC, and even then, it’s likely we’d see a delay by those deadlines as well.”

Grayscale has sued the SEC in an attempt to convert its Bitcoin trust fund into a spot ETF.

Seyffart noted in the article that the SEC initially has 45 days to make a decision on an ETF application from it is filed.

However, it can also delay the decision up to two times, which gives the regulator an additional 90 days and 60 days to decide.

According to Bloomberg, many observers already expect the SEC to again delay the decision in September.

Among those who expect the SEC to delay the decision as much as it can was Stephane Ouellette, CEO of institutional crypto platform FRNT Financial.

“The base case for the ETF application has to be that the administrators will do what they have for years and use all their powers to delay the decision,” Ouellette said, while adding “even if these products were ultimately approved, it would be very surprising to see them approved at the first instance they are able to be.”