The U.S. Securities and Exchange Commission (SEC) has again postponed decision-making on several key spot bitcoin ETF applications. Why the wait? And what does this mean for key players like BlackRock, WisdomTree, and Bitwise?
SEC’s Latest Bitcoin ETF Postponement: A Closer Look
On Thursday, the SEC announced its decision to delay judgments on applications from major entities such as VanEck, Wise Origin, and Invesco Galaxy. Interestingly, these applications come from a mix of traditional financial powerhouses and emerging crypto-focused firms.
With a spotlight on Wise Origin (Fidelity), BlackRock, and Invesco Galaxy, the industry’s eagerness is palpable. Launching the first spot Bitcoin ETF is not just about prestige. Such an ETF could open doors for more retail investors in the bitcoin arena. It presents a hassle-free alternative to buying Bitcoin directly or grappling with the intricacies of digital wallets.
Instead of a definitive answer, the SEC has opted for extended comment periods. This move facilitates more public insights on the proposals. Deadlines now stretch into mid-October: Wise Origin, Galaxy, and WisdomTree face an October 17 deadline. Valkyrie follows on October 19, while Bitwise has until October 16.
SEC’s tendency to use its full 240-day review window isn’t new. Traditionally, they’ve maximized comment and review periods, often holding off on final decisions until the very end.
A Legal Perspective: D.C. Circuit Court of Appeals
The D.C. Circuit Court raised eyebrows over the SEC’s ETF application rejections earlier. Labeling some arguments as “arbitrary,” the court spotlighted Grayscale’s complaint against the SEC’s denial.
Judge Rao pointed out inconsistencies in the SEC’s decisions. While they denied Grayscale‘s proposal, they green-lit two bitcoin futures ETFs without clarifying the disparity. Considering the near-perfect correlation of 99.9% between spot and futures market prices for bitcoin, Rao sided with Grayscale’s claim of material similarity.
She emphasized, “Bitcoin and bitcoin futures are undeniably correlated. Moreover, surveillance-sharing agreements with the CME are identical. Both should equally detect market anomalies.”
It’s worth noting that the SEC’s stance on Grayscale wasn’t an isolated incident. They’ve exhibited similar reasoning in past rejections, leading the appeals court to mandate another application review.
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