SEC again postponed bitcoin spot ETF until next year
The U.S. Securities and Exchange Commission (SEC) has once again postponed its decision on the approval of a Bitcoin spot exchange-traded fund (ETF) until January 10, 2024. This is not the first time the SEC has delayed its decision on Bitcoin ETF proposals. The agency has been deferring its decision on several applications for the first spot Bitcoin ETF since August 2023.
A Bitcoin spot ETF is an investment fund that tracks the price of Bitcoin and allows investors to buy and sell shares of the fund on a stock exchange. Unlike futures-based ETFs, spot ETFs hold the underlying asset, in this case, Bitcoin. The market expects that the approval of a Bitcoin spot ETF would allow for greater retail investment in the Bitcoin space while saving investors from the troubles of setting up a wallet or having to buy Bitcoin.
BlackRock pioneered in applying for a spot Bitcoin ETF on June 15, with Coinbase as the crypto custodian and spot market data provider and BNY Mellon as the cash custodian. Later same moves were made by some other huge investment firms such as WisdomTree, VanEck, Fidelity, Invesco and ARK Invest. By present, the SEC has not yet approved any of them.
Unlikely for the market, the SEC is still not ready to approve any of the applications made. It seems that there are several reasons for the Commission to delay its decision on the approval of a Bitcoin spot ETF, including concerns about market manipulation and custody of Bitcoin.
Back in June, the agency has denied all spot Bitcoin ETF applications, saying applicants have not shown they can protect investors from market manipulation. The SEC is also concerned about the potential for fraud and manipulation in the Bitcoin market, which is largely unregulated. Additionally, the custody of Bitcoin is a concern for the SEC, as it is a digital asset that can be lost or stolen.
The delay in the approval of a Bitcoin spot ETF means that investors will have to wait until at least January 10, 2024, to invest in a Bitcoin ETF. The SEC's concerns about market manipulation and custody of Bitcoin are valid, and investors should be cautious when investing in the cryptocurrency market. However these delay is not necessarily a bad thing for the market itself as it gives regulators more time to study the products and make additional efforts to protect investors while allowing for innovation.
From the other side, the recent Grayscale’s court victory against the SEC has boosted hopes for the approval of a Bitcoin spot ETF in the nearest future. Now it is clear that those hopes are not going to come true. The delay in the approval of a Bitcoin spot ETF has put pressure on the Bitcoin price, causing it to drop due to liquidations. Bitcoin was hovering above $27000 during the September, but the SEC’s delay in its decision discouraged the Bitcoin market, pushing the price down until it found support below $26000.
Meanwhile, as we already wrote, Nomura, a Japanese investment bank with $500 billion in assets, has launched a Bitcoin Adoption Fund through its subsidiary, Laser Digital Asset Management. The fund is designed to provide long-only exposure to Bitcoin and is available exclusively to institutional investors.