June 21, 2024

SEC Delays Decision on Bitcoin ETFs Across the Board

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The U.S. Securities and Exchange Commission (SEC) has opted to delay its decision on several spot bitcoin exchange-traded fund (ETF) applications, including those from major players like BlackRock, WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise, and Valkyrie Digital Assets. This announcement, made through agency filings on Thursday, extends the anticipation around the potential launch of the first-ever spot bitcoin ETF.

The SEC commenced its review of these applications last month, marking a significant step in the convergence of cryptocurrency and traditional finance. The applicants are eyeing the creation of a spot bitcoin ETF, a move widely supported by advocates who believe it will facilitate greater retail investment in the bitcoin sector, sparing investors from the complexities of setting up digital wallets or purchasing bitcoin directly.

Instead of making an immediate decision, the SEC has decided to prolong the process. It has extended existing comment periods and invited additional public input regarding the ETF applications. The new deadlines for applicants vary, with Wise Origin, Galaxy, and WisdomTree having until October 17 to await a decision, while Valkyrie’s deadline is set for two days later on October 19. Bitwise will have to wait until October 16 for its verdict.

The SEC operates under a total review period of 240 days from the initial commencement of its assessment of these applications to reach a final decision, whether it be approval or denial. Historically, the regulator has used every available comment and review period to delay making final determinations until the full 240 days have passed, making Thursday’s filings a predictable development.

This delay coincides with a recent ruling by the D.C. Circuit Court of Appeals, which questioned some of the SEC’s arguments in the rejection of previous bitcoin ETF applications. The court found that the SEC’s reasoning appeared “arbitrary and capricious” in certain cases. This decision came after Grayscale, whose parent company is Digital Currency Group, contested the SEC’s refusal to convert the Grayscale Bitcoin Trust into an ETF.

Judge Neomi Rao, writing for the unanimous court, noted that the SEC’s denial of Grayscale’s application contradicted its approval of bitcoin futures ETFs. The court asserted that the SEC had not provided a solid basis for these differing stances, especially given the close correlation between spot and futures market prices in the bitcoin market.

As the SEC reevaluates its approach, the cryptocurrency industry and financial markets will be closely watching for developments regarding these highly anticipated spot bitcoin ETFs.

Richard Wells
Financial Desk

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