SEC Delays Decision on Spot Bitcoin ETFs
On August 31, 2023, the U.S. Securities and Exchange Commission (SEC) announced a delay in its decision-making process for seven spot Bitcoin ETF proposals. The regulatory body cited the need for additional time to thoroughly review the proposed rule changes and address any concerns. The decision deadlines for various funds have been extended to October 17 and 19. The SEC has not yet approved any spot Bitcoin ETFs due to potential fraud and market manipulation concerns.
Court Rules SEC Must Review Grayscale’s Bitcoin ETF Application
On August 29, the U.S. Court of Appeals for the D.C. Circuit ruled that the SEC must review Grayscale Investments’ application to convert its “Grayscale Bitcoin Trust” product to a spot Bitcoin ETF. The court stated that the SEC must treat similar cases alike and that the denial of Grayscale’s proposal was arbitrary and capricious. The court vacated the order denying the application.
Former SEC Chairman Comments on the Delay
Former SEC Chairman Jay Clayton expressed little surprise at the delay. He noted that the SEC’s postponement aligns with the timeframe set by the DC Circuit Court for reconsidering its earlier rationale against approving a Bitcoin ETF. Clayton emphasized the need for the SEC to differentiate between securities and non-securities offerings in the crypto landscape. He believes that approving a Bitcoin ETF is “inevitable” and that the disparity between futures-based and spot-based Bitcoin products is unsustainable.
SEC’s Deferral Raises Questions About Intentions
The SEC’s deferral has raised queries about whether the agency is seeking new reasons to reject Bitcoin ETF applications. Clayton believes that the SEC is using this time to reassess its stance, particularly as large financial institutions have entered the market with surveillance mechanisms, arguing that the spot Bitcoin market is not easily manipulated. He expects to see “progress on this going forward.”
Hot Take
The delay in the SEC’s decision on spot Bitcoin ETFs is a sign that the regulatory body is taking the time to thoroughly review the proposals and address concerns. The court ruling on Grayscale’s application also highlights the need for consistent treatment of similar products. Former SEC Chairman Jay Clayton believes that approving a Bitcoin ETF is inevitable and that the SEC needs to differentiate between securities and non-securities offerings. The deferral has raised questions about the agency’s intentions, but Clayton is optimistic about progress in the future.
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