On Monday, October 16, several news outlets mistakenly reported that the US Securities and Exchange Commission (SEC) had approved Blackrock’s spot Bitcoin ETF application. Markets responded by bumping the price of Bitcoin, only to backtrack once the erroneous nature of the story became apparent.
However, although the SEC has yet to approve a single Bitcoin spot ETF, fund managers are optimistic that the agency won’t be able to sustain its resistance for much longer, and that multiple Bitcoin funds could soon hit the market
In an interview with CNBC, Ark Invest CEO, Cathie Woods, observed that the SEC’s stance toward various Bitcoin spot ETF applications, including Ark’s, has changed since the agency lost a key lawsuit against Grayscale.
In the Grayscale case, the court asked the SEC to reconsider the company’s application to convert its Bitcoin trust to an ETF. Arguing that the agency had failed to demonstrate a good reason for restricting spot Bitcoin ETFs while allowing their futures-based equivalents, the court accused the SEC of making an “arbitrary and capricious” distinction between the different types of funds.
Commenting on the SEC’s decision not to appeal the Grayscale judgment, Woods said the SEC has demonstrated “a change in behavior.”
Continuing, she noted that “a number of bitcoin ETFs could be approved at the same time,” raising the prospect that several of the nine applications currently making their way through the SEC review process could be finalized soon.
Noting that the final deadline for Ark’s Bitcoin ETF application is January 10th, Woods speculated that the first approvals could come at the end of 2023 or early 2024.
Should the SEC opt to announce multiple spot Bitcoin ETF approvals together, it may help to placate critics, who have accused the regulator of granting preferential treatment to Wall Street giants like Blackrock at the expense of smaller asset managers.
For example, Messari CEO Ryan Selkis recently accused the SEC of prioritizing Wall Street interests over the needs of retail investors.
Likewise, during recent a hearing of the House Financial Services Committee, Congressman Warren Davidson cautioned SEC Chairman Gary Gensler against favoring applications by financial giants over those of smaller firms that have been attempting to list spot Bitcoin funds for years.
“Will this resemble some sort of free pass for one favored company while others remain locked out?” Davidson challenged Gensler. “It seems that’s happened before at the SEC,” he added.