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June 30, 2022
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SEC Delays Decisions on Two More Bitcoin ETFs

Bitwise and Grayscale Bitcoin ETF proposals live to see another day – or just get a suspension of execution

If all you want for Christmas is a spot market Bitcoin ETF, time is running out.

The U.S. Securities and Exchange Commission this week delayed decisions on two proposals for funds traded on Bitcoin exchanges, one each from asset management groups Bitwise and Grayscale. SEC commissioners now have an additional 45 days to review the Bitwise Bitcoin ETP Trust and Grayscale Bitcoin Trust proposals and either approve or deny them. A third option is to postpone the decision again.

ETFs are investments that trade like stocks on traditional exchanges, making them accessible to everyday savers. Instead of showing an individual stock, ETFs track a group of stocks or other assets.

While the agency has yet to approve a Bitcoin spot ETF – it has rejected requests from VanEck and WisdomTree over the past six weeks, it has allowed several Bitcoin futures ETFs to begin trading this year. But these two things are not the same.

A Bitcoin ETF would be linked directly to the price of BTC on spot exchanges such as Coinbase – where you trade the cryptocurrency at whatever the current price is. Bitcoin futures ETFs are tied to derivatives markets, which investors use to hedge risk and/or predict price direction.

SEC Chairman Gary Gensler cabled companies earlier this year that BTC futures ETFs would be seriously analyzed because they are based on a different law than proposed ETFs: the Investments Company Act of 1940.

“When combined with the other federal securities laws, the ’40 Act provides significant investor protection for mutual funds and ETFs,” he said.

Still, many, including Congressmen Tom Emmer (R-MN) and Darren Soto (D-FL), say Bitcoin futures, if any, are riskier for investors because they add complexity when using the same price data. underlying.

“We asked why, if you are comfortable allowing an ETF based on derivatives contracts to be traded, you are not as comfortable or more comfortable allowing Bitcoin-based ETFs to start trading in cash.”

The representatives wrote in an open letter to President Gensler.

“Bitcoin spot ETFs are directly asset-based, which inherently provides more protection for investors.”

While Emmer, Soto and others want a Bitcoin ETF before the New Year, they will likely have to wait. Unless, of course, there is a Christmas miracle. The SEC is expected to rule on the Kryptoin Bitcoin Trust ETF by December 24.

Source: DeCrypt

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