SEC Still Against Spot-based Bitcoin ETFs. Is There A Light At The End Of The Tunnel?

Best Owie

Last Updated: June 11, 2024 2:21 pm

3 mins read

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

With the approvals of futures bitcoin ETFs, firms have taken it one step further and have applied with the Securities and Exchanges Commission (SEC) for spot-based bitcoin ETFs. However, unlike their futures and short counterparts, the spot ETFs have not found favor in the eyes of the regulatory watchdog. And as more spot-based bitcoin ETF applications are declined by the SEC, questions have arisen about whether the market will see one anytime soon.

Grayscale And Bitwise Applications Rejected

Over the last month, anticipation had built up regarding spot-based Bitcoin ETF filings by both Grayscale and Bitwise. Grayscale had filed its application last year, with the SEC postponing its decision multiple times, but the firm had remained steadfast in its resolve to try to get approval for a spot bitcoin ETF. The final decision had come last week and it was indeed negative as experts had forecasted.

Grayscale had received a rejection on its application but it was not the only one. Bitwise had also made a filing for a spot BTC ETF and the SEC had also put a stamp of rejection on it too. The latter had filed to convert its popular Grayscale Bitcoin Trust (GBTC) to a spot-based ETF. The fund which has $12.35 billion is the largest bitcoin trust and is looking to move to the next level.

At the rejection, Grayscale had swiftly filed a lawsuit against the SEC alleging that the regulatory body has no reason to actually deny its application. Michael Sonnenshein, CEO of Grayscale, lamented the fact that the SEC had green-lighted four futures bitcoin ETFs in less than one year but had refused to approve any spot-based BTC ETF, accusing them of “acting arbitrary and capricious.”

Grayscale discount grows | Source: Arcane Research

However, the SEC has said that the rejection was due to fears about market manipulations in the bitcoin spot markets, the role that the stablecoin Tether will play in this, and the overall lack of regulated exchanges and surveillance in the bitcoin market.

Bitwise on the other hand has not made any move following the rejection and seems to be taking this one on the chin.

Is A Spot-Based Bitcoin ETF Coming?

With the rejection, the reality of a spot-based bitcoin ETF coming to the market has been pushed back once more. Given the time frame that it took for the SEC to make a decision on these ETFs, it is expected that filing and getting a decision on another spot-based ETF could take almost two years or about 18 months. This means that it is unlikely that the market will see a spot-based BTC ETF this year contrary to what was forecasted by market analysts in 2021.

BTC holding shakily above $20,000 | Source: BTCUSD on TradingView.com

Nevertheless, Grayscale has not backed down on its mission to turn the GBTC into a spot-based ETF. The lawsuit is still in its early stages but the CEO has expressed hope that they would receive a decision in the next year.

Grayscale’s GBTC still continues to trade at a heavy discount and the firm’s annual management fee is firmly at 2%. This means that if its filing to convert to a spot-based ETF is not approved in the next two decades and fails to remain close-ended, it would be unable to justify the discount at which it is currently trading. However, with the firm’s drive to gain approval from the SEC, it is not a stretch to think that it would get it in the next 20 years.

Featured image from Coincu News, charts from Arcane Research and TradingView.com

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…

Best Owie

Best Owie is a seasoned managing editor with a wealth of experience currently serving as the Managing Editor at NewsBTC. Best is a highly skilled professional with a track record of producing engaging and informative content. With a keen eye for detail and a passion for accuracy, Best is committed to ensuring that each article published meets the highest standards of quality.

Best has over six years of experience in the crypto industry and has overseen the creation and publishing of thousands of articles over the years. Best is always abreast of everything that is going on in the crypto industry in order to create and curate the most relevant content for readers. This shines through in Best’s publications, which are always clear and concise, enabling easy reading and understanding for all.

Best is also an avid learner and advocate for new technology. This has seen Best dive into topics in areas such as decentralized finance (DeFi), non-fungible tokens (NFTs), Layer 2 blockchains, etc. In addition to this, Best is a vocal member of the crypto community across various social media platforms such as X and Reddit. Best’s work garners tens of thousands of readers monthly, who rely on the information in these publications to keep up-to-date with everything happening in the crypto community.

Best’s articles explore breaking news, intricate systems such as yield farming, liquidity pools, and other decentralized finance (DeFi) systems. This is because Best understands the importance of information to gaining financial freedom and believes that everyone should have access to this information.

Best also believes in leveraging the blockchain for philanthropy to create the most positive social impact. This involves work with charitable organizations focused on financial literacy and education. With each article, Best lends a voice to important issues such as a more financially inclusive future, transparent systems for growth and development, and technology that is not self-serving but one that serves all of humanity.

When not curating engaging content, Best can be found reading a book with a cup of hot chocolate, enjoying a Netflix series, or exploring the outdoors with Green - the world’s most quiet and well-behaved Husky. Best’s interests also span other industries such as art, finance, and security, attending seminars and conferences in not just the crypto industry but other industries as well.

As an animal lover, Best is also involved with charities for animals, local shelters, and rescues. Best is also involved in local events that promote inclusivity, such as being a prominent member of hiking clubs and a cycling club, as well as being a part of a very happy group of animal lovers.

Best is a true professional in every sense of the word, with an exceptional dedication to producing high-quality work. This shines through in Best's work on and off the clock. These include advocating for inclusive crypto education for all, the impact of financial illiteracy, and the benefits of adopting new technologies such as cryptocurrencies. Best’s prolific career in the media industry is a testament of how hard work and dedication pays.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.