The Securities and Exchange Commission (SEC) is facing mounting pressure to approve a Bitcoin exchange-traded fund (ETF) in the United States. This delay in a final decision has led to speculation that key players on Wall Street, including BlackRock and Fidelity, will be involved in the verdict. The SEC is currently reviewing a total of eight applications for a spot Bitcoin ETF, with companies such as Ark and 21Shares, Bitwise, VanEck, WisdomTree, Galaxy Digital, and others waiting for a decision. These firms collectively manage over $15 trillion in assets. The approval of these ETFs is crucial as the approved Futures backed products are currently lagging behind the spot performance, negatively impacting investors.
On August 11, the SEC initiated a 21-day comment period for the ARK 21Shares Bitcoin ETF. The SEC is seeking answers regarding the proposal’s ability to prevent fraudulent and manipulative acts and practices, as well as whether the Bitcoin market is susceptible to manipulation. Furthermore, the regulator expressed concerns about Coinbase’s surveillance-sharing agreement, questioning whether Coinbase’s participation in ETF surveillance would effectively detect, investigate, and deter fraud and manipulation in Bitcoin’s price.
One of the main concerns of the SEC regarding spot crypto ETFs is the potential market manipulation by large investors. However, registering all eight ETFs could mitigate this risk, as these firms would be able to trade with each other frequently, taking opposite sides. Ruslan Lienkha, Chief of Markets at YouHodler, suggests that approving all eight ETFs would significantly reduce the probability of manipulation.
The delay in the SEC’s decision has had a limited impact on Bitcoin’s price, which currently hovers around the $30,000 mark. Market expectations are not heavily influenced by today’s decision as traders and investors anticipate the SEC taking the time it needs. The SEC still has two upcoming deadlines before a final decision is made, with the next deadline for the ARK 21Shares application due in January 2022 and Valkyrie having two upcoming deadlines in January and March next year.
The approval of a Bitcoin ETF could have a significant impact on the crypto investment landscape. According to Lienkha, an approval could bring over $70 billion in liquidity to the Bitcoin market. The availability of Bitcoin ETFs would give regular investors greater confidence and convenience in investing in Bitcoin, as they would have professional help and wouldn’t need to delve into the technical details and analyze risks on their own.
Overall, the delay in the SEC’s decision on the Bitcoin ETF has raised expectations that a final verdict will involve major players on Wall Street. The approval of these ETFs could have a transformative effect on the crypto investment landscape, providing greater accessibility and liquidity to the Bitcoin market.
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