Ever since the world's largest asset manager entered the race to launch the first spot-based Bitcoin ETF in the US, various providers have been anticipating its approval. While most analysts have speculated on an approval next week, the Securities and Exchange Commission (SEC) could make an early decision.
Crypto product providers have been applying to the SEC for Bitcoin exchange traded funds (ETFs) for over a decade. The first breakthrough came in October 2021 with the launch of a futures-based ETF. The SEC continued to reject funds based on the direct price of Bitcoin ("spot"). Just over two years later, the pressure from Wall Street banks seems to have overwhelmed the agency. Approval for the first spot-based bitcoin ETF could come in the coming days as reported by Reuters, citing insiders.
The battle for a spot Bitcoin ETF
An ETF is an exchange-traded investment fund that represents exposure to a portfolio of assets such as stocks, bonds or commodities. There are generally two types. Futures-based ETFs track the performance of underlying assets through futures contracts, while spot-based ETFs track the price movement of assets based on their actual market prices. In the case of Bitcoin, futures-based ETFs have some drawbacks for investors, especially when the market is experiencing an upward trend.
The legal victory of crypto conglomerate Grayscale against the Securities and Exchange Commission (SEC) in August provided a major boost to the developments. A three-judge appeals panel in Washington D.C. unanimously ruled that the categorical rejection of spot-based Bitcoin ETFs was arbitrary.
Early approval this week?
Now some of Wall Street's giants are waiting for the green light from the SEC. Over the past few weeks, BlackRock, VanEck, Valkyrie, Bitwise, Invesco, Fidelity, WisdomTree and a joint venture between Ark Investments and 21Shares have made several revisions to their applications. These revisions address all of the details that the regulator has identified as deficiencies in dozens of interviews. The SEC has until 10 January to make its decision, and it is expected that all applications will be accepted simultaneously.
Insiders told Reuters that the SEC could notify issuers of the approval of spot Bitcoin ETFs as early as this Tuesday or Wednesday. This would allow trading to begin the following week. More than 14 providers with combined assets of well over $10 trillion are currently hoping for approval, which could have a longer-term impact on the price of Bitcoin.