SEC Won’t Approve Bitcoin ETF until Early 2024, Says CEO of Jacobi Asset Management
Jacobi's Bednall says SEC will further delay ETF approvals
- Jacobi launched Europe’s first spot Bitcoin ETF for investor protection and ESG benefits, while Europe has more crypto investment options than the US.
- Jacobi anticipates SEC delays in ETF approvals, with potential Greyscale Trust conversion in early 2024
Jacobi Asset Management recently introduced the first Bitcoin spot ETF in Europe. The Jacobi FT Wilshire Bitcoin ETF not only ushers in a change in the European cryptocurrency market but also advances environmental sustainability initiatives that promote the long-term viability of the industry there.
CCN spoke with the CEO of Jacobi Asset Management, Martin Bednall, who said their approval process involved extensive discussions with various EU regulatory authorities. He explained that their interactions with regulators have generally been favorable, emphasizing that regulators prioritize safeguarding investors, particularly retail ones.
Consequently, innovative products in emerging asset categories are subject to rigorous regulatory scrutiny, which is a prudent approach to ensure investor protection.
Bednall also added how different EU regulations are compared to the US law, where regulators tend to control almost all aspects of crypto businesses and, therefore, tend to delay giving spot ETFs approval.
CCN: Regarding legal considerations, when talking about the US market, how unusual is it to deny a spot ETF while approving a futures ETF?”
Bednall: The SEC has previously approved futures ETFs because the futures themselves are traded on a regulated market, whereas Bitcoin itself is not. The SEC’s current view seems to be that the spot Bitcoin market and cryptocurrency exchanges do not have sufficient oversight or monitoring compared to the futures market. Recent spot Bitcoin ETF applications in the US have included a market surveillance mechanism to allay the SEC’s concerns.
CCN: Can you tell us more about Jacobi’s experience regarding the EU legislation?
Bednall: Jacobi spoke with numerous EU regulators while launching our product. Our experience has been largely positive. Regulators’ main role is investor protection, especially for retail investors, so new products in new asset classes will rightly be met with a challenge from regulators.
SEC to Delay Approvals
CCN: Considering the scale of Jacobi Asset Management’s announcement, the emergence of Europe’s first Bitcoin spot ETF should’ve had a resounding impact on the price of Bitcoin, but that was not the case. Could you explain?
Bednall: European investors have access to a greater number of crypto investment products than those in the US, so the pent-up demand seen in the US does not exist on the same scale in Europe. Jacobi has launched the first spot Bitcoin ETF in order to give institutional and professional investors better investor protection and ESG credentials.
As the fund is targeted towards professional and institutional investors, these types of clients typically take more time to conduct their due diligence and understand the structure and performance of a product before investing.
CCN: What are the two most probable responses from the SEC following the recent ruling?
Bednall: We expect the SEC to further delay approvals with the potential for eventual approval of all ETFs and likely conversion of Greyscale’s Bitcoin Trust into an ETF in early 2024, but it all depends on the regulatory environment, so precise timing is not always easy to predict.
CCN: Do you foresee the likelihood of Gary Gensler’s agency approving Ethereum futures ETFs in the United States?
Bednall: As futures-based Bitcoin ETFs are already approved, there is no reason not to approve an Ethereum Futures ETF.
CCN: What are the primary reasons that spot Bitcoin ETFs are seen as a substantial threat to the businesses of crypto exchanges?
Bednall: We see them not as a threat but as an opportunity. Just like equity ETFs are a benefit to traditional exchanges, crypto ETFs can become beneficial to crypto exchanges.
Leading asset managers’ interest in Bitcoin ETFs and the SEC’s decision to approve for review several applications from well-known market players like Blackrock, after previously rejecting earlier attempts, have sparked confidence in the crypto field this year.
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However, according to Bednall’s comments, this will not go easy.
Cases such as Revolut or GameStop are showing how hard it is for companies dealing with crypto to survive in the US exactly because of the undefined legislation.
Recently, Revolut, a fintech company with headquarters in the UK and a $33 billion valuation in its most recent fundraising round, has informed users in the US via email that they will no longer be allowed to place buy orders for digital assets as of September 2.
GameStop, the struggling video game company most known for playing a key role in the 2021 meme stock craze, informed customers this month that it was canceling its cryptocurrency wallet due to “regulatory uncertainty.”
Following lawsuits the SEC filed in June against Binance and Coinbase, two of the biggest cryptocurrency exchanges in the world, Robinhood, the online stock brokerage that also sells cryptocurrencies, delisted SOL, MATIC, and ADA.
Additionally, it was claimed that Jane Street and Jump Crypto, two of the biggest market makers for cryptocurrencies globally, were reducing their activity in the United States due to the federal government’s crackdown on cryptocurrency businesses in the wake of the collapse of the now-bankrupt exchange FTX.
