The potential inception of spot Bitcoin exchange-traded funds (ETFs) has been a hot topic in the crypto industry for quite a while, promising to build a broad-based market for digital assets. Recently, the application from heavyweight BlackRock to set up a Bitcoin ETF has provoked considerable optimism in the market. The argument is that if such an industry juggernaut expresses interest in this innovation, approval from the U.S. Securities and Exchange Commission (SEC) seems inevitable.
However, industry experts are less convinced about the imminent green light for Bitcoin ETFs. Several application requests for spot bitcoin ETFs were filed almost simultaneously with the SEC, including one from BlackRock, proclaiming their intention to establish a surveillance-sharing agreement with crypto exchange Coinbase. While on one hand, this saw Bitcoin breach the $31,000 mark and inspired a bullish market sentiment, some skepticism remains. For instance, Octavio Marenzi, CEO of Opimas LLC, has expressed doubts about the approval of the application by the SEC.
Indeed, the crypto industry has been breaching the walls of the ETF fortification for nigh on a decade. Nevertheless, the unregulated landscape of crypto exchanges makes approval a far-off possibility, warns Volatility Shares’ CIO Stuart Barton who led the first successful leveraged crypto ETF application in the U.S. Barton posits that the regulation of an exchange is a lengthy, multi-year process which must precede an ETF approval, casting further doubts on any swift resolution.
Adding to the chorus of skepticism are James Koutoulas – a hedge fund manager contending against the SEC – and Jai Waterman, Blockstation’s CEO. They agree that an immediate spot Bitcoin ETF approval in the U.S is unlikely. Koutoulas noted that although the crypto community’s optimism is warranted, eventual approval is not guaranteed.
On the flip side, there have been some favorable developments for the crypto industry. For example, the U.S. court’s ruling in favor of Ripple, stating that the sale of its XRP tokens did not constitute investment contracts, could exert pressure on the SEC. Grayscale’s lawyers are also questioning the SEC’s decision to approve a potentially riskier leveraged Bitcoin-based ETF amidst the rejection of Grayscale’s own spot Bitcoin ETF application.
Despite the controversy, BlackRock’s CEO, Larry Fink exudes confidence, although he also pointed out that ETF approval could take time. Some service the notion that, if there was to be an approval, BlackRock would be the best placed to take the first in the crypto ETF race. However, it’s important to note that the process for ETF approval is fraught with regulatory complexities which may slow down the process considerably. The path to market might be tough, but with ongoing pressure, adoption in the space could be imminent.
Source: Coindesk
