A bitcoin ETF may not be approved by the SEC until 2023 despite surging interest, according to a fund provider that’s already been through the process

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Former Commodity Futures Trading Commission Chairman Gary Gensler testifying before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill on July 30, 2013.

  • The wait for an SEC approved bitcoin ETF might be longer than most think, according to one fund provider that’s been through the approval process.
  • William Cai of Wilshire Phoenix doesn’t expect the SEC to approve a bitcoin ETF until 2022 or 2023.
  • “A bitcoin ETF is not on his top priority list as far as we can see,” Cai said, referring to SEC chief Gary Gensler.
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Anticipation for a SEC-approved bitcoin ETF is high, but investors shouldn’t hold their breath as it may still be years away from becoming reality in the US.

That’s according to Wilshire Phoenix co-founder William Cai, who has first-hand experience in dealing with the SEC and its bitcoin ETF approval process.

Cai told Insider that he doesn’t expect the SEC to approve a bitcoin ETF until 2022 or 2023, even as more and more fund providers rush to submit their own applications with the regulator.

There are now more than 10 bitcoin ETF applications sitting with the SEC, with Cathie Wood’s Ark Invest the latest fund provider to submit its own application.

“We think they’re all going to get stuck,” Cai said.

The SEC’s rejection of the Wilshire Phoenix bitcoin ETF application in February 2020 gave the fund provider insight into what’s holding up the agency in approving a highly-sought after crypto ETF in the US.

“The major thing is manipulation, and they’re focused on the cash market, [which] is not regulated and does not trade on regulated exchanges,” Cai explained. A cash market is a marketplace in which the commodities or securities purchased are paid for and received at the point of sale.

The SEC is also concerned that cryptocurrencies are a relatively new asset class, and are still in the process of maturing, according to Cai. Bitcoin was created in 2009.

Even though Wilshire Phoenix worked on its bitcoin ETF application when Jay Clayton was Chairman of the SEC, Cai is seeing the same comments pop up in bitcoin ETF extension letters under current SEC Chairman Gary Gensler.

“I’ve seen nothing that suggests there’s been a switch in their thinking,” Cai said.

“Once it became more clear that Gensler was going to be [SEC chairman], to us it was even more of the case that [a bitcoin ETF approval] wasn’t going to happen,” Cai said.

Part of Cai’s view comes from his experience as a trader at JPMorgan when Gensler was head of the CFTC. “He came in, and he totally regulated, to the surprise of a lot of people. He was a really strict, but fair regulator,” Cai said.

Gensler’s current agenda at the SEC also means bitcoin is not a top priority for him for now, according to Cai.

“Gensler has a big item agenda on his plate already, between ESG, Robinhood and meme stocks. A bitcoin ETF is not on his top priority list as far as we can see,” Cai explained.

Still, while Cai is not hopeful that a bitcoin ETF will be approved by the SEC anytime soon, it will eventually happen.

“We believe a bitcoin ETF is good for the market, and it is going to happen,” Cai said, comparing the struggles faced by early bitcoin ETFs to the first gold ETF, which sat in limbo for a while before it was approved by the SEC in 2004.

In the meantime, Wilshire Phoenix is working towards receiving approval for a bitcoin trust that will likely trade on the OTC markets and compete with the popular Grayscale Bitcoin Trust.

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The SEC has delayed a decision on another bitcoin ETF, putting off approval of a fund from WisdomTree

Gary Gensler, SEC Chairman, financial regulator, alone, testifying
Gary Gensler’s SEC has increased its focus on cryptocurrencies

  • The SEC on Tuesday delayed WisdomTree’s application for a bitcoin ETF, adding to a pile-up of applications sitting on the agency’s docket.
  • “There’s nothing [in the SEC’s order] that we’re not saying ourselves as an ETF issuer,” Ryan Louvar, general counsel at WisdomTree, told Insider.
  • But the agency now may be warming up to the view, expressed by many bitcoin fund applicants, that not approving a regulated ETF could present its own risks.
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The SEC on Tuesday delayed WisdomTree’s application for a bitcoin ETF, adding to a pile-up of applications sitting on the agency’s docket.

In an order putting off approval, the SEC called for public comment on a number of concerns, including whether the bitcoin market is subject to manipulation. The agency similarly asked for public comment in June.

“There’s nothing [in the SEC’s order] that we’re not saying ourselves as an ETF issuer,” Ryan Louvar, general counsel at WisdomTree, told Insider previously. “Bitcoin is volatile. It’s a speculative asset.”

But the SEC now may be warming up to the view, expressed by many bitcoin fund applicants, that not approving a regulated ETF could present its own risks. In Tuesday’s filings – as in previous ones – the agency asked for comment on whether “manipulation concerns … are outweighed by quantifiable investor protection issues.”

“I was encouraged by that step, that the SEC is at least taking incremental steps here,” said Louvar.

SEC Chair Gary Gensler has worried aloud that the bitcoin market, as currently structured, offers no real investor protections or any way to prevent manipulation. That has made some in the crypto industry bearish on the prospects for ETF approval this year.

Read more: Crypto traders have staked billions of dollars on Kraken over the last year to earn interest. The exchange’s product chief explains what staking is, and shares 3 of the top-yielding tokens on its platform.

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Cathie Wood’s Ark Invest is working with provider 21Shares to create a bitcoin ETF

Cathie Wood

Ark Invest – the firm run by star stock picker Cathie Wood – has partnered with exchange-traded fund provider 21Shares to to create a bitcoin exchange-traded fund, according to a filing with the Securities and Exchange Commission.

The ARK 21Shares Bitcoin ETF will track the S&P Bitcoin index and trade on the Cboe BZX Exchange under the ticker ARKB. Its investment objective is quite simple: track the price of bitcoin.

A prominent bitcoin bull, Wood has been loading up on bitcoin-related investments such as Grayscale Bitcoin Trust and Coinbase Global over the last few months.

The proposed bitcoin ETF joins a long list of over a dozen applications waiting for approval from the SEC. The agency for its part has recently postponed another decision to approve a bitcoin ETF.

Bitcoin has gained mainstream adoption of late, soaring above a market capitalization of $1 trillion. It has however been trading rangebound in the past days at just half of its $64,000 peak in April.

Read more: Here are 3 altcoins that could surge by 1000% – including the eco-friendly version of bitcoin – according to a crypto analyst and entrepreneur who vets early-stage projects

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The SEC has postponed its decision on a bitcoin ETF from Valkyrie Digital Assets, the second crypto fund application the regulator has delayed in the last week

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  • The SEC postponed a decision on another bitcoin ETF application it is reviewing, from Valkyrie Digital Assets.
  • The regulator had to decide whether to approve the ETF by June 26, but has extended the deadline.
  • Last week, the SEC delayed the decision to approve a bitcoin ETF from VanEck .
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The US Securities and Exchange Commission postponed the decision to approve or deny yet another bitcoin ETF application.

The regulator had to decide whether to approve the Valkyrie Bitcoin ETF by June 26, but it has now extended the review period to August 10. The SEC said it needed more time to make a decision.

The delay comes just a week after the SEC postponed a decision to approve a bitcoin ETF from asset manager VanEck, citing concerns over the potential for manipulation in the cryptocurrency market.

The SEC first delayed its decision on the VanEck’s bitcoin ETF in late April, pushing its ruling back until June. But the SEC said in a filing last Wednesday it would take more time to consult with the public.

Despite the hesitancy from the SEC, investors have indicated that they’re interested in a crypto-ETF.

A recent Credit Suisse survey found that 33% of financial advisors would prefer to invest in digital asset or cryptocurrency ETFs prior to making direct investments into the asset class. 40% of advisors would prefer crypto exposure via an ETF over directly investing entirely.

Canada has already approved and launched several bitcoin and ether ETFs, but the US is still waiting for SEC approval. Currently the SEC is reviewing at least eight applications for what could be the first cryptocurrency ETF in the country.

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