SEC Likely to Approve Spot Bitcoin ETFs with a Catch
The US Securities and Exchange Commission (SEC) is expected to approve spot Bitcoin exchange-traded funds (ETFs) as the deadline approaches. However, the SEC may require clear language on cash-only creations and a signed agreement with an authorized participant (AP). Bloomberg’s ETF expert, Erich Balchunas, suggests that Grayscale’s potential conversion of its Grayscale Bitcoin Trust (GBTC) into an ETF could pose a challenge for the SEC in maintaining fair competition. GBTC already has a substantial advantage with $20 billion in embedded assets and a daily embedded volume of $150 million. Approving GBTC could bias the race in favor of one participant.
Advantages of Cash-Only Bitcoin ETFs
Clear language on cash-only creations in Bitcoin ETF applications may not deter investors. Grantor trusts like GBTC are not taxed at the fund level, eliminating a major concern. Existing cash-only ETFs on the market show reasonable spreads and premium/discount ratios. The SEC must ensure fairness while considering the advantages certain issuers have in terms of embedded assets and trading volume. The commission requires clear language on cash-only creations and signed agreements with authorized participants to establish a level playing field. However, approving GBTC will have a significant impact on the competitive landscape of the Bitcoin ETF market and its participants.
Hot Take: SEC’s Decision Shapes the Bitcoin ETF Market
The SEC’s decision regarding spot Bitcoin ETFs will shape the competitive landscape of the market. Approving GBTC could give it an unfair advantage, potentially influencing the success of established players like Grayscale, BlackRock, and Fidelity. Currently, Bitcoin is priced at $42,800 with a 0.6% increase in the last 24 hours but a 2.3% decline in the past week.
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