Bitcoin Spot ETFs Await SEC Decision as Former Chair Says Approval Is Inevitable

The SEC is expected to rule on the first batch of applications for spot bitcoin ETFs this week, amid growing anticipation from the crypto industry and investors. Former SEC chair Jay Clayton said on CNBC that there is nothing left to decide and that approval is a big step for finance.

SEC Has Until This Week to Make a Decision

The U.S. Securities and Exchange Commission (SEC) is facing a deadline this week to approve or reject the first wave of applications for spot bitcoin exchange-traded funds (ETFs), which would track the current price of the cryptocurrency rather than futures contracts.

The crypto industry and investors are eagerly awaiting the SEC’s decision, as spot bitcoin ETFs are seen as a more accessible and regulated way to gain exposure to the digital asset, without the hassle and risk of buying and storing bitcoins directly.

Approval is Inevitable

Several financial firms, including BlackRock, Ark Investment Management and Grayscale, have filed for spot bitcoin ETFs in recent months, hoping to persuade the SEC to finally allow this type of investment vehicle after years of rejections.

Former SEC chair Jay Clayton, who stepped down in December 2020, said on CNBC’s “Squawk Box” on Monday that approval is inevitable and that there is nothing left to decide.

“Approval is inevitable,” Clayton said. “There’s nothing left to decide. … This is a big step not just for bitcoin, but for finance generally.”

Main Concerns Addressed by SEC

Clayton added that the SEC has already addressed the main concerns around spot bitcoin ETFs, such as market manipulation, custody and surveillance, and that the agency should move forward with the approval process.

However, the current SEC chair Gary Gensler has been more cautious and has expressed a preference for bitcoin futures ETFs over spot ETFs, citing the higher regulatory standards for futures markets.

The SEC has already approved several bitcoin futures ETFs, which began trading in October 2021 and have attracted billions of dollars in inflows. However, some analysts and investors argue that futures ETFs are less efficient and more costly than spot ETFs, as they involve paying fees and premiums to roll over the contracts.

Mirrors The Price of Bitcoin

Spot bitcoin ETFs, on the other hand, would invest directly in bitcoins as the underlying asset, and would aim to mirror the price of the cryptocurrency in the spot market. Spot bitcoin ETFs would also require a secure and reliable custody solution, which registered custodians would manage.

The SEC has until Jan. 11 to rule on the first spot bitcoin ETF application, filed by Valkyrie Investments. The agency could approve, deny or delay the decision, as it has done with previous applications.

The crypto community is hopeful that the SEC will finally give the green light to spot bitcoin ETFs, as they could boost the liquidity, stability and adoption of bitcoin, as well as attract more institutional and retail investors to the crypto space.

Author: Grace

Grace likes gardening. She holds some BTC and ETH.

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