The crypto community has long awaited the approval of a Bitcoin spot exchange-traded fund (ETF) by the Securities and Exchange Commission (SEC). This desire stems from beliefs that an SEC-approved spot ETF would propel Bitcoin firmly into the mainstream, opening the floodgates for institutional capital.
Keypoints
- Cathie Wood of ARK Invest is optimistic the SEC will approve multiple spot Bitcoin ETFs by the end of 2023. She believes the SEC's recent actions signal a change in attitude.
- This change in attitude may be due to the recent court ruling against the SEC in the Grayscale Bitcoin Trust case, which found the SEC's rejection of GBTC's ETF application was "arbitrary and capricious."
- Wood expects a decision by January 10, 2024 and thinks multiple Bitcoin ETFs could be approved at the same time.
- There was a brief Bitcoin price rally when an erroneous tweet claimed the SEC approved BlackRock's Bitcoin ETF application. This highlighted the market's anticipation of SEC approval.
- In an interview, Wood blamed SEC Chair Gary Gensler specifically for obstructing spot Bitcoin ETF applications, not SEC staff who she says understand and research Bitcoin well.
- Wood believes Gensler allowed Bitcoin futures ETFs but not spot Bitcoin because of a "personal Vietnam", referring to his anti-crypto stance.
For years, the SEC has rejected every spot Bitcoin ETF application, allowing only Bitcoin futures ETFs. But recent developments suggest the regulatory winds may be shifting.
ARK Invest CEO Cathie Wood said the SEC's request for information on ARK's latest filing signals a "change in behavior." The influential investor believes multiple spot Bitcoin ETFs could receive approval by year's end.
What's behind the SEC's apparent change of heart? Experts point to the bombshell court ruling against the agency in its legal battle with Grayscale. In August, a judge found the SEC's rejection of Grayscale's spot Bitcoin ETF application was "arbitrary and capricious."
This bruising defeat in the courts seems to have impacted the SEC's stance. Rather than appeal the ruling, the agency will likely have to reverse its rejection of the Grayscale application.
According to Wood, SEC Chair Gary Gensler is personally responsible for stonewalling spot Bitcoin ETFs, despite his own staff conducting prudent research into crypto assets. She accused Gensler of letting his own anti-crypto biases override data-driven analysis.
Gensler allowed futures-based Bitcoin ETFs due to CFTC joint oversight, while rejecting spot ETFs which lack derivative complexities. For Wood, this is inexplicable given spot ETFs have no counterparty risks and would strengthen investor protections.
Lawmakers have joined the growing chorus for Bitcoin spot ETF approval. A bipartisan group of Representatives argued regulated spot ETFs would protect investors better than existing crypto exposure channels.
As the SEC finds itself out of step with other government agencies and even its own staff's research, political pressure for Bitcoin ETF approval will likely intensify. Add capitulation in the courts, and the stars may finally be aligning for Bitcoin spot ETF launch in America. For hungry crypto investors, this would mark a watershed moment.
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