The crypto rally paused following the latest filing of the securities regulators, but the move went according to the forecast. Crypto investors keep getting slammed by the SEC, but it’s time to wake up to the fact the SEC will never be kind to crypto projects.
The U.S. Securities and Exchange Commission (SEC) has reportedly delayed the decision on seven spot Bitcoin ETF filings. These applications were previously submitted by BlackRock, WisdomTree, VanEck, Invesco Galaxy, Bitwise, Valkyrie, and Fidelity.
The filing stated, “the Commission finds it appropriate to designate a longer period” to review all proposed rule changes and arising issues submitted to them. The regulators will have until October 19, 2023, to decide whether to “approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change.”
October will be the second deadline for those Bitcoin ETF applications. The SEC can extend the review period if they need more time, and the final deadline is around March 2024.
All eyes are now on the SEC’s decision on Grayscale’s application to convert its Bitcoin Trust Investment (GBTC) to a spot Bitcoin ETF. On Tuesday, the U.S. District of Columbia Court of Appeals ruled that the SEC must review Grayscale’s proposal, which was initially rejected in June 2022.
The court’s decision is a victory for Grayscale and the broader cryptocurrency industry. The crypto market reacted bullishly shortly after the news, with Bitcoin’s price reaching $28,000 and altcoins’ prices increasing.
However, the rally lost steam following the SEC’s delay. Bitcoin ended the week under $26,000. Most cryptos trade in the same direction, so as Bitcoin lost ground, the entire market sold off to finish the week.
The SEC has 45 standard days to respond to act on Grayscale’s proposal. The regulators may accept or reject the application or appeal the court ruling just as they did in the XRP case.
Investors should expect the SEC to continue its antagonism toward cryptos, and buy them anyway. The Western financial system is broken, and it is only a matter of time before alternative assets fly higher.
Experts Remain Optimistic
Bloomberg’s ETF experts, James Seyffart and Eric Balchunas, recently expressed their optimism regarding the possibility that the SEC may soon give the green light to Bitcoin ETFs.
The analysts raised the odds of potential approvals from 65% to 75%. This noteworthy adjustment reflects a significant surge in confidence, considering that just a few weeks ago, the probability stood at 50%.
Bloomberg experts noted that the reason for that increase was the recent victory of Grayscale. The result of the legal battle has put SEC Chair Gary Gensler under pressure. James Seyffart and Elliot Stein agreed that Grayscale winning against the SEC in a lawsuit has made it even more likely that Bitcoin ETFs could get approved.
With financial giants like BlackRock seeking Bitcoin ETF approval, it could be challenging for Gensler not to say yes. Additionally, some think politicians from the Democratic Party might push Gensler to approve the Bitcoin ETF because a rejection could be seen as a bad move for him.
According to their statements, even if the SEC delays the decision this year, the acceptance rate of a spot Bitcoin ETF could peak at 75% by the end of 2024. Recently, the SEC appears poised to greenlight a set of Ethereum futures ETF proposals that have surfaced, according to Bloomberg.
Up to this point, the US securities agency has approved exclusively futures-based ETFs while rejecting spot ETFs. Their rationale centers on believing that the cryptocurrency market remains susceptible to speculation, manipulation, and fraudulent activities.
Experts and crypto members are betting on the launch of the spot Bitcoin ETFs. It’s undeniable that the SEC approval will be a powerful catalyst to enable capital from traditional finance to flow into cryptocurrencies without requiring direct ownership, thus bridging the gap between crypto and the mainstream.
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Author: Nicholas Say