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- 1 The first deadline for Bitcoin ETF approval is January 10, 2024.
- 2 The SEC is yet to decide regarding approval of Bitcoin Spot ETF.
The market rejoiced when Bitcoin ETF applications started pouring in; the SEC could approve some or all, but are the investors ready? Experts hint that the Securities and Exchange Commission can approve Bitcoin Spot ETF in the coming months. If so, the Bitcoin price is expected to skyrocket. But a court decision and the potential effect of approval are creating a lot of questions.
SEC and Bitcoin ETF – Why Accept One and Reject Another?
Grayscale Bitcoin Trust (GBTC) has been trying to get approval for Bitcoin ETF for years but has yet to succeed. Grayscale then filed a lawsuit against the financial watchdog and the United States Court of Appeals for the D.C. Circuit inclined with the crypto entity. The court has now rejected the points on which the SEC was denying GBTC conversion to Bitcoin ETF.
In counter-argument, the SEC said that it could not approve a spot Bitcoin ETF because of two reasons: one, the market is not regulated, and the market size cannot prevent manipulation. The court referred to the SEC’s previous approval of a futures-based Bitcoin product.
“Hey, you approved a futures-based Bitcoin product. The futures and the spot market are “like” products. If you approve one, you have to approve the other.” – SEC.
The court draws the similarity between the spot and futures market for Bitcoin and cuts the manipulation argument by saying that either market has the potential to affect Bitcoin price. The denial of Grayscale’s request was unjust and the SEC failed to explain the different treatment of broadly similar products.
What Can the SEC Do From Here?
The SEC has several options: The first that it can appeal the case. If so, the decision would be on hold unless a resolution is reached or for 45 days until the regulators decide. If the financial watchdog decides to appeal, the scenario forks into various options.
The Securities and Exchange Commission can approve some or all of the nine ETF applications or it can approve exchanges to list Grayscale ETF. The agency can also delay the approval for as long as possible or as long as the law allows. For instance, Cathie Wood’s ARK Invest’s Bitcoin ETF approval was published in the Federal Register on May 15, 2023. The SEC has a maximum of 240 days to approve or deny the request. The first deadline is January 10, 2024.
The Securities and Exchange Commission can also come up with an argument to support its denial of Grayscale’s request. It could improve the risk of being sued by the crypto entity again. Finally, the SEC can also kill the option for Bitcoin Futures ETF.
Possible Effect of Bitcoin ETF on the Market
A Bitcoin Spot ETF, if approved, would provide exposure to the general public with Bitcoin. Customarily, to buy or trade cryptocurrency, an individual must first know the eccentricities of the crypto market and have a crypto wallet. These factors and lack of proper knowledge discourage many from entering the market despite being enthusiastic about it.
With Bitcoin Halving approaching in April 2024, the mining reward will be slashed, and the price is expected to increase. If the possibility of Bitcoin ETF is in the mix, experts argue that the price could cross the $100,000 mark. However, Jacobi Asset Management was listed as Europe’s first Bitcoin ETF on August 16, 2023, but the BTC price remains unchanged.
Since the United States is a significant market, the approval of a Bitcoin ETF by the Securities and Exchange Commission should considerably impact the Bitcoin price.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
