The landscape of cryptocurrency regulation could be on the brink of significant change. The US Securities and Exchange Commission (SEC), an organization well-known for its careful and measured approach, is finding itself in a bit of a bind. After a conspicuous win by Grayscale, the agency might see itself under an obligation to approve multiple spot Bitcoin (BTC) exchange-traded fund (ETF) applications.
The recent court victory of Grayscale seems to have blindsided the SEC. The organization had previously chosen to approve futures-based Bitcoin ETFs but had sidelined Grayscale’s proposal to convert its Bitcoin trust into an ETF. However, with Grayscale’s win, it’s evident now that for the SEC to maintain its initial decision, it would need to backtrack on its previous approvals.
Analysts led by Nikolaos Panigirtzoglou at JPMorgan opine that such a retrograde move would be enormously disruptive, not to mention embarrassing for the SEC. They suggest that a more likely outcome would be for the SEC to give the green light to pending spot Bitcoin ETF applications from several asset managers, including Grayscale.
However, the implications don’t end there. If futures-based and spot Bitcoin ETFs carry a similar risk profile as the court suggests, as both are tightly intertwined with the spot market and the CME futures market, then SEC’s initial denial could tarnish its credibility.
It’s not just Grayscale that might change the ETF landscape. Several firms, including BlackRock, Fidelity, and Invesco, have proposed spot Bitcoin ETFs that the SEC has postponed until at least mid-October. The delay, argue JPMorgan analysts, likely points to the approval of multiple applications simultaneously rather than favoring any single applicant.
On the positive side, more competition could lead to lower ETF fees, a boon for investors. Conversely, Grayscale might find itself under pressure to cut costs if the trust is converted into the world’s largest Bitcoin spot ETF. This move could create a ripple effect and expedite the launch of Bitcoin ETFs by 95%, catalyzing a significant shift in cryptocurrency markets.
A cloud continues to hover over the SEC’s future actions. While it has always expressed apprehensions due to inadequate cross-market surveillance and concerns of fraud and market manipulation, Grayscale’s victory and the resultant possible ETF approvals will require it to address these concerns promptly. The year may end with a 75% chance of launching spot Bitcoin ETFs, marking a significant milestone in the evolution of cryptocurrency regulations.
Source: Cryptonews
