Bitcoin ETFs overcome legal obstacles and challenges
The US Securities and Exchange Commission (SEC) had an opportunity to appeal the federal appellate court's August ruling that it was wrong to deny a request from the cryptocurrency company Grayscale Investments to convert its $16.7 billion Bitcoin Trust (GBTC) into a Bitcoin ETF.
Today’s Cryptocurrency analysis on behalf of Rania Gule Market Analyst at XS.com
The price of Bitcoin touched $30,000 levels yesterday before retreating and began trading today at $28,218, following the successful launch of a US-traded exchange-traded fund (ETF) investing directly in Bitcoin. This development marked another milestone after the regulatory body refused to appeal a judicial decision against it. The US Securities and Exchange Commission (SEC) had an opportunity to appeal the federal appellate court’s August ruling that it was wrong to deny a request from the cryptocurrency company Grayscale Investments to convert its $16.7 billion Bitcoin Trust (GBTC) into a Bitcoin ETF. GBTC is the world’s largest cryptocurrency fund.
I believe the SEC’s decision not to appeal indicates that the future launch of a publicly traded Bitcoin fund in the United States appears more likely. In addition to the ongoing interactions between the regulatory body and other asset managers seeking to launch exchange-traded Bitcoin funds, this is a sign that a US-traded Bitcoin fund is likely to enter the market shortly. We may also see new digital assets traded in early 2024 after years of the SEC rejecting such plans.
The SEC’s opposition to converting GBTC was based on the view that Bitcoin, traded on unregulated exchanges, is susceptible to fraud and market manipulation, whereas Bitcoin futures contracts were originally accepted for the primary retail fund because they are traded in regulated venues like stock exchanges and the Chicago Mercantile Exchange.
In my opinion, the SEC’s decision not to appeal now leaves it with the option to oppose GBTC conversion for alternative reasons or ultimately approve it, which would open the door to many publicly traded Bitcoin investment funds. Besides Grayscale, there are 10 other companies, including BlackRock, Fidelity, Ark Invest, WisdomTree, VanEck, and Valkyrie, that have submitted applications to launch Bitcoin ETFs.
Many of these companies have recently adjusted their filings and provided assurances that their assets will be held in separate accounts by their bank and not commingled with the company’s or other clients’ assets. This has led to expectations that the SEC is interacting positively with these companies rather than planning to reject their applications outright.
Therefore, despite the possibility of the SEC citing other reasons to oppose and reject publicly traded Bitcoin investment funds, it has become increasingly difficult for them to do so, especially after effectively approving similar products traded on exchanges in Canada and Europe without any issues.
The emergence of publicly traded Bitcoin investment funds in the United States may pave the way for more investments in the cryptocurrency space, as these funds are seen as a cost-effective and secure system, that could support the medium and long-term growth of Bitcoin and digital currencies.
