(Bloomberg) — Bitcoin ETF candidates received another dose of disappointment when U.S. regulators pushed to make a decision on such a product on Friday. But the next time they hear from them could be in a few weeks.
Most read from Bloomberg
The U.S. Securities and Exchange Commission is due to reach a conclusion on the Bitwise Bitcoin ETP Trust on September 1, according to a Bloomberg Intelligence count. Supervisors can reject, approve or defer. Decisions on applications from BlackRock, VanEck, WisdomTree and Invesco are expected just a day later, with others following closely.
Crypto supporters are keeping track of the dates as expectations are high that this time – unlike previous attempts – an exchange-traded fund investing directly in Bitcoin could be given the go-ahead. Many have taken particular note of the fact that the wealth management powerhouse BlackRock has thrown its name into the race – it has an almost impeccable track record of launching ETFs.
Still, the road to a potential spot fund was neither easy nor fast.
“We also fully expect delays in those decisions,” said James Seyffart, analyst at Bloomberg Intelligence. “The only thing that could potentially change that view is if we get a decision in the Grayscale lawsuit against the SEC, and even then, we’re likely to see delays in those deadlines as well.” Grayscale is suing the SEC for trying to convert its Bitcoin trust into an ETF.
Many in the crypto community — and fans outside of it — have longed for a spot Bitcoin ETF for years. They argue that investing in Bitcoin would not only make it more accessible to everyday investors, but would also help bring the digital asset space closer to traditional financial markets. On the other hand, regulators have consistently cited fraud and tampering as some of the reasons for not approving such a product. Founded by brothers Tyler and Cameron Winklevoss, Gemini was the first company to try a physically backed Bitcoin ETF with a 2013 filing. It was rejected by the SEC.
But the recent excitement has encouraged issuers to try out not just Bitcoin ETFs, but more exotic vehicles as well. A number of companies have filed paperwork for Ether futures or Bitcoin and Ether futures medley funds. Such ETFs are not currently traded in the US and the SEC had rejected attempts for Ether futures ETFs earlier this year.
Another potential positive signal on the SEC softening its stance on crypto ETFs could be the launch of the Volatility Shares 2x Bitcoin Strategy ETF (ticker BITX), according to the Coinbase Bytes newsletter. That fund debuted in June and has amassed more than $20 million in assets. It was the first of its kind to start trading.
The SEC initially has 45 days to make a decision on the spot fund applications. That’s followed by another 45 days, then 90, then 60, for a total of 240. It will have to make a decision within 240 days, Seyffart said.
Many market observers also expect a slowdown in September.
“The base case for the ETF application should be that the managers will do what they have been doing for years and use all their powers to delay the decision,” said Stephane Ouellette, CEO of FRNT Financial, an institutional platform focused on digital assets. . “Even if these products were eventually approved, it would be very surprising to see them initially approved.”
Most read from Bloomberg Businessweek
©2023 Bloomberg LP