The United States Securities and Exchange Commission (SEC) — the financial regulator with the final say over allowing a spot cryptocurrency exchange-traded fund (ETF) — may be moving closer to giving the investment vehicle the green light after several years of applications.
In June, the world’s largest asset management firm, BlackRock, added its application to the bundle of Bitcoin (BTC) ETF filings currently being reviewed by the SEC, creating renewed interest among investors in and out of the crypto space. The company later added a “surveillance-sharing agreement” with cryptocurrency exchange Coinbase following reports the SEC could be more open to accepting an ETF application under such conditions.
BlackRock is one of many firms with crypto ETF applications in the SEC pipeline. ARK Invest, under CEO Cathie Wood, filed to list its ARK 21Shares spot Bitcoin ETF in May 2023 and received the most recent delay from the SEC on Aug. 11, pushing back the deadline another 21 days as the regulator opens the proposal to public comments.
Under SEC guidelines, the federal regulator has the authority to delay ETF applications for up to 240 days — by opening them to public comment or otherwise — from the first filing in the Federal Register. Even so, the SEC has never approved a spot Bitcoin ETF proposal from any firm in the United States and only started accepting investment vehicles tied to BTC futures in October 2021.
One of the challenges behind getting the SEC to allow a spot crypto ETF may be the nature of the investment vehicle. Bitcoin futures-linked ETFs also enable individuals and companies to invest in the crypto asset without an exchange, while a spot BTC ETF could involve holding Bitcoin within a fund for more direct investment.
Gemini co-founders Cameron and Tyler Winklevoss were the first to apply for a crypto exchange-traded product listing using their Bitcoin Trust in July 2013, when many regulators might not have even understood digital currencies and the SEC ultimately rejected the application.
Stuart Barton, co-founder and chief investment officer of Volatility Shares — the firm behind the listing of a leveraged Bitcoin futures ETF in June — told Cointelegraph its process of applying with the SEC involved back-and-forth negotiations. The regulator proposed changes to disclosure documents but was generally “cooperative.” He speculated that smaller firms might have more…