SkyBridge’s Bitcoin ETF Application Abandoned by SEC
The United States Securities and Exchange Commission (SEC) has declared the First Trust-SkyBridge’s BTC ETF Trust, managed by investment management firm SkyBridge Capital, as abandoned. This comes as a blow to SkyBridge Capital amidst the growing adoption of Bitcoin spot exchange-traded funds (ETFs).
Eric Balchunas, a senior Bloomberg Intelligence ETF analyst and crypto advocate, shared this development on social media. According to Balchunas, the SEC ordered the First Trust SkyBridge Bitcoin ETF to declare their filing abandoned. He expressed uncertainty about the reason behind this decision, as First Trust was one of the filers who did not engage in the post-BLK race.
In addition, Balchunas mentioned that if the SEC had approved the launch of the First Trust SkyBridge Bitcoin ETF, it could have potentially increased fund inflows by 15% since First Trust is known for its strong sales capabilities.
The SEC stated in the filing that SkyBridge has not complied with Rule 479 warning, which requires timely amendment or withdrawal of a statement; otherwise, it will be deemed abandoned. SkyBridge Capital was one of the early firms to file for a Bitcoin ETF, but its initial application was rejected in January 2022. The company did not reapply for the ETF introduction after the rejection.
Under section 6(a) of the Securities Act of 1933, First Trust SkyBridge BTC ETF registered securities with the SEC by filing a registration statement. However, after nine months since filing, the registration statement has not gone into effect. As a result, it was ordered to be declared abandoned on March 12 by the Division of Corporation Finance on behalf of the Commission.
Grayscale Witnesses Significant Outflows
While leading companies like Blackrock have experienced significant inflows since the launch of Bitcoin ETFs, Grayscale has been witnessing notable outflows. Eric Balchunas revealed that Grayscale Bitcoin Trust ETF (GBTC) has had the second-biggest cumulative outflows of any ETF in the past 15 years.
GBTC has witnessed a cumulative outflow of approximately $10.553 billion, making it the second-highest outflow after iShares MSCI Emerging Markets ETF (EEM) with $12.341 billion. This is interesting considering EEM influenced BlackRock’s move with IEMG, which Grayscale is executing with BTC and GLD with GLDM.
Other notable companies experiencing substantial outflows include SPDR Gold Shares (GLD), SPDR S&P MidCap 400 ETF Trust (MDY), and United States Fund LP (USO).
Hot Take: Implications for SkyBridge Capital and Grayscale
The abandonment of SkyBridge Capital’s Bitcoin ETF application by the SEC is a setback for the investment management firm. It reflects the challenges faced by some ETF issuers who fail to meet certain requirements, leading to rejection or abandonment of their applications. This highlights the importance of complying with regulatory guidelines to ensure a successful launch of ETFs in the cryptocurrency market.
On the other hand, Grayscale’s significant outflows raise questions about investor sentiment towards its Bitcoin Trust ETF (GBTC). The outflows suggest that investors may be diversifying their portfolios or moving towards other investment options. It will be interesting to see how Grayscale addresses this trend and whether it impacts its future offerings.
Overall, these developments indicate the evolving landscape of cryptocurrency investments and the challenges faced by market participants in navigating regulatory requirements and investor preferences.
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