SEC delays verdict on BlackRock’s ETF application; Will Bitcoin ETFs see the light of day?

In a recent development that has caught the attention of the cryptocurrency community, the U.S. Securities and Exchange Commission (SEC) has opted to delay its verdict on several Bitcoin exchange-traded fund (ETF) proposals. Among these is a notable application from BlackRock, recognized globally as the largest asset manager.

Background:

Seven prominent firms, including BlackRock, WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise, and Valkyrie Digital Assets, had their ETF applications officially published in the Federal Register on July 19.

The SEC had originally marked September 4 as the date to deliver its rulings on these applications. However, in a move that was not entirely unexpected given the SEC's past behavior, the decision has been postponed by 45 days. This means these firms will now be awaiting the regulator's verdict until mid-October.

Industry Reactions:

James Seyffart, a research analyst at Bloomberg Intelligence, took to Twitter to share his views. He mentioned,

“We fully expected delays on this round of spot Bitcoin ETF filings. It would have been surprising if they were approved this week.”

The SEC's ability to delay its verdict on ETF proposals can extend up to 240 days, roughly six months, which has often been a point of contention and frustration for many in the crypto sector.

Significance of Grayscale's Win:

This delay from the SEC comes on the heels of a significant legal victory for Grayscale Investments. Grayscale, which manages the world's largest Bitcoin fund known as the Grayscale Bitcoin Trust (GBTC), recently received the green light from the District of Columbia Court of Appeals to convert its fund into a spot Bitcoin ETF.

The court's decision to overturn an earlier SEC ruling that prevented this conversion has been seen as a landmark moment. The judge labeled the SEC's previous denial of Grayscale's proposal as “arbitrary” and “capricious.” This has led many to believe that the path for future Bitcoin ETF approvals has been paved.

The Broader Impact:

Nigel Green, the founder of the financial management group deVere, commented on the court's decision, stating that it effectively dismantles the SEC's primary argument against approving spot Bitcoin ETFs over recent years. He said, “This win paves the way for Bitcoin ETFs.”

Furthermore, the fluctuating price of Bitcoin reflects the industry's keen interest in these ETFs. After the news of Grayscale's victory, Bitcoin's price surged by 7%, only to face a downturn following the SEC's announcement of the delay.

Looking Ahead:

The overarching question remains: When will major investment giants like BlackRock, Fidelity, and Invesco finally receive the green light for their spot Bitcoin ETFs?

Julian Klymochko, founder and CEO of the Calgary-based firm Accelerate, believes that a U.S. spot Bitcoin ETF is likely to be a story for 2024. He predicts rapid developments in the sector and anticipates a competitive landscape as numerous companies have applied for a spot Bitcoin ETF.

As the crypto industry continues to evolve and mature, all eyes will be on regulatory bodies like the SEC and how they navigate the complex landscape of cryptocurrency ETFs. The decisions made in the coming months will undoubtedly shape the future of crypto investments in the U.S. and potentially worldwide.