The Growing Interest in Spot Bitcoin ETFs
Financial institutions, including banks and brokerages, are showing a growing interest in spot Bitcoin ETFs. They are urging the Securities and Exchange Commission (SEC) to redefine crypto assets to allow them to play a larger role, such as becoming Bitcoin ETF custodians.
Banks Petition SEC for Crypto Revisions
A coalition of trade groups, including the Bank Policy Institute, American Bankers Association, Financial Services Forum, and Securities Industry and Financial Markets Association, has sent a letter to SEC Chair Gary Gensler. The letter requests the SEC to revisit and modify the Staff Accounting Bulletin 121 (SAB 121), which provides guidance on accounting for crypto asset custody obligations. The coalition argues that the current guidance restricts banks from offering crypto custody services at scale.
The group proposes narrowing the definition of cryptocurrencies to exclude traditional assets recorded on the blockchain. They also advocate for exempting banks from the on-balance sheet requirements while maintaining disclosure requirements.
FOMO Grapples Banks with Crypto ETFs’ Exclusion
According to Matt Hougan, Bitwise’s chief investment officer, the letter indicates a shift in the “tone around crypto regulation in Washington.” Banks are eager to participate in the “digital financial wave” created by Bitcoin ETFs.
Banks are already feeling the fear of missing out (FOMO) as they cannot hold BTC ETFs for their customers. This sentiment is driven by the growing popularity of Bitcoin ETFs compared to traditional assets like gold.
While gold exchange-traded funds (ETFs) have seen divestment of over $3 billion since the start of the year, Bitcoin ETFs have attracted over $4 billion in inflows despite being significantly smaller than the gold ETF market.
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