If nothing else, they are consistent.
The SEC turned down the Van Eck Bitcoin Trust ETF application. This comes a month after approving the first Bitcoin ETF in the United States. Since that time, many more were added.
What is different is they are based upon the futures market. All the presently approved Bitcoin ETFs are based upon futures' contracts, not spot pricing.
This is a move that has some perplexed.
Source
Protecting The Public?
The SEC, naturally, claims that it is protecting the investing public. It believes that futures ETFs are less susceptible to fraud and price manipulation. The spot price is based upon an unregulated underlying asset.
Here is the crux of the matter. The Bitcoin futures market is regulated by the agency. Bitcoin, itself, is not. Thus, the view is that the futures market is not as likely to be manipulated since the SEC is watching.
Of course, this is easily countered by simply pointing out all the manipulation and fraud in markets the SEC does oversee. Also, the futures market can be leveraged up, something that is not easily done with Bitcoin. In this situation, we might be able to make the case that leveraged contracts cause more instability than an asset that is not.
This is not a viewpoint the SEC is going to consider.
Grayscale Going To Turn Up The Heat?
When it comes to Wall Street cryptocurrency assets, none can rival Grayscale. The company now has more than $60 million in Assets Under Management (AUM). This is where we see the biggest player lurking.
Just this week, CEO Michael Sonnenshein said that the idea of a spot Bitcoin ETF now goes beyond the investing community and is political. He was referring to a bipartisan letter that was sent to the SEC by a couple members of Congress. Obviously, this was done before the Van Eck decision, so it had no impact.
Grayscale is an interesting case since it has an application in for a spot Bitcoin ETF**. It is already working towards rolling its Bitcoin Trust (GBTC) to an ETF. The company also took great strides to appease the SEC by making itself a reporting company, even though it wasn't required by law.
The countdown is on for the decision. There is a 70 day window for the SEC to rule on Grayscale's application, a period that does not come up until December.
Will they approve it?
We are likely to see Grayscale turn up the heat by enlisting the aid of Congress. With cryptocurrency getting so much recognition, there are members of Congress who are siding with the industry. This is a perfect time to tap into that and have them apply pressure on the SEC.
No matter what the course of action, it is unlikely that we see this approved this year. Some experts on the matter believe there will be approval in June or July of 2022. That will give the SEC time to lay out a strategy that entities offering the ETFs will have to adhere.
In the meantime, the industry can only focus upon getting larger. IF that happens, it becomes impossible to ignore. Regulators are just one piece of the puzzle. Politicians, who are more apt to follow public opinion, can be flipped as things start to take off. After all, few want to be on the wrong side of a winning technological move.
For purists, the idea of an ETF means nothing. While that is true, people can buy Bitcoin direct, there is a lot of money that is prevented from doing that. A spot ETF might open the door for a great deal more buying pressure on Bitcoin.
The present ETFs do not have to hold Bitcoin, only the futures contracts.
If you found this article informative, please give an upvote and rehive.
gif by @doze
logo by @st8z