Many people in the industry disagree about how the SEC should handle the investment vehicle, and the commission has not decided on several spot Bitcoin ETF applications that are still waiting.
The Uncertainty
A lot of people are making assumptions about what would happen if the US Securities and Exchange Commission decided to force exchanges to list a spot Bitcoin exchange-traded fund (ETF) before the deadline of January 10.
Several applications for spot BTC exchange-traded products were pending approval or disapproval by the SEC, which was not disclosed at the time of publication. The commission will decide whether to accept or reject the listing of shares of a Bitcoin ETF from 21Shares and ARK Invest by January 10. If the SEC approves one cryptocurrency investment vehicle, analysts theorize that it may allow more.
Further Findings
According to research published on January 3 by Markus Thielen of 10x Research, ETF applicants failed to meet the conditions for SEC approval, even in the face of strong trends in the price of Bitcoin. The study paper was made public amid rumors that the SEC would meet with significant exchanges to complete comments on applications that spot cryptocurrency ETF issuers had submitted.
According to Thielen, “There is a one-sided market consensus that the SEC will approve Bitcoin Spot ETFs by next week.” “We see a chance to trade against the consensus, though, as we stress the risk of being ahead of events that could have a big impact on prices.”
He added:
“Despite frequent meetings between ETF applicants and SEC staff leading to refiled applications, we hold a contrarian view, asserting that all proposals fall short of a critical requirement for SEC approval, likely resulting in rejection in January.”
The Dilemma
Based on conversations with exchange executives and prior legal precedent, several experts have conjectured that the SEC will probably accept the offering from ARK Invest and others in the next ten days. Grayscale Investments filed a spot Bitcoin ETF application, which the commission was compelled to review in October after a judge declared the agency’s rejection of the offering to be “arbitrary and capricious.” James Murphy, the founder of Ludlow Street Advisors, stated on X that he anticipated receiving several approvals on January 10. “The SEC fired every bullet it had against Grayscale. The SEC’s “new reason” [for possible rejection] would probably be deemed pretextual by the court; if it is rejected, penalties against the SEC attorneys may be applicable.
Asset managers have submitted several applications for spot BTC exchange-traded products in the past, but the SEC has never authorized any for listing and trading on a U.S. exchange. The largest asset management firm in the world, BlackRock, applied for a spot in the Bitcoin ETF in the US in June 2023, reigniting interest in the investment vehicle and raising expectations that the commission would have to take action.
Conclusion
In a study published on January 2, Thielen—an analyst for the cryptocurrency trading platform Matrixport as well—said that the SEC “will reject” a spot Bitcoin ETF. Matrixport founder Wu Jihan stated on X that the report was meant for the firm’s clients rather than the media after it was shared on several social networking sites and news publications.
