SEC Delaying Bitcoin ETF: Something Bigger at Play?
Photo Credit: Blockworks
On Nov. 17, the United States Securities and Exchange Commission (SEC) again delayed an application by the investment firm Franklin Templeton on the much-anticipated Bitcoin (BTC) exchange-traded fund (ETF). This delay marks a recurring trend in the SEC's approach to the application of Bitcoin ETFs and has left the crypto community speculating about the underlying reasons and potential outcomes.
A Bitcoin ETF serves as a bridge between traditional finance and cryptocurrencies. It is a publicly traded security that offers investors exposure to the price movements of Bitcoin. However, instead of directly holding the crypto asset, they possess a contract that promises to buy or sell Bitcoin at a future date.
A spot Bitcoin ETF is very similar, except it is tied to the current market price instead of dealing in futures. Once approved, the Bitcoin ETFs will begin operations immediately and be listed and traded on major stock exchanges.
However, the SEC must first approve the ETF within 240 days of its proposal, according to Blockworks. There are several times in this 240-day period where the SEC must either approve, deny, or postpone their decision on the ETF.
Thirteen of the world’s largest investment firms, with their assets under management totalling over $20 trillion USD, including BlackRock, Grayscale, WisdomTree, ARK Invest, and Fidelity, have all submitted applications for Bitcoin ETFs. According to Forbes, the SEC has been meeting with spot Bitcoin ETF applicants, addressing crucial technical aspects for potential U.S. exchange listings. Additionally, SEC memos disclosed separate meetings with BlackRock and Grayscale representatives, signalling a dynamic regulatory environment. Speculation is high on the approval timeline for a spot Bitcoin ETF. Hashdex, among these applicants, eyes a potential launch by Q2 2024, while Hashdex’s Dramane Meite claims that the conversation surrounding the launch has shifted from ‘if’ to ‘when.’
Eric Balchunas and James Seyffart, Bloomberg's research analysts, are confident that Jan. 10, 2024, will be the date for the simultaneous approvals of all spot Bitcoin ETFs, which coincides with the deadline for the application from ARK Invest.
Standard Chartered Bank projects that Bitcoin will reach $100,000 by the end of 2024. Geoff Kendrick, head of crypto research and EM FX West at Standard Chartered emphasised the pivotal role of ETFs in driving this anticipated upswing. He also highlighted Bitcoin's increased dominance in the crypto market, up around 150 percent since the start of 2023.
"Going forward, we expect digital assets' rising overall market cap to be a bigger driver of Bitcoin price upside than a continued rise in Bitcoin dominance within the space," Kendrick wrote. New supply will also be diminished by next April's Bitcoin halving, a recurring event that reduces the amount of tokens awarded for mining by half every 4 years. As the supply of Bitcoin experiences a two-fold decrease while demand for the asset is increasing, Kendrick argues that the price of Bitcoin will only surge.