Bitcoin ETF: almost there – The Cryptonomist

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Former U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton says the Bitcoin ETF has a strong chance of being approved if applicants can prove its efficiency and effectiveness as a vehicle. investment for digital assets.

However, Clayton refrained from speculating on when or if such an ETF will be approved.

We are close to SEC approval of a Bitcoin ETF

During an appearance on CNBC, Clayton said:

“If it is true that the spot market has similar efficiency to the futures market, it would be hard to resist approving a Bitcoin ETF.”

This statement suggests that if the Bitcoin spot market has investor protections and oversight measures similar to the futures market, it would be difficult for the SEC to reject a proposed ETF.

Clayton, who chaired the SEC in rejecting several spot Bitcoin ETF applications, currently works as a senior policy adviser at law firm Sullivan & Cromwell.

He pointed to a lack of transparency and concerns over investor protection in the unregulated cash market as reasons for previous rejections.

To illustrate the SEC’s approach, Clayton compared the approval of futures-based ETFs in the past.

He noted that the SEC approved futures-based ETFs after assessing the oversight and investor protections present in the futures market, while similar safeguards were not seen in the cash market.

The long odyssey for the approval of a Bitcoin ETF

Recently, investment giant BlackRock submitted an application for a spot Bitcoin ETF, raising hopes that approval is imminent. BlackRock has a strong track record of ETF endorsements.

ETFs offered by BlackRock and others suggest using Coinbase as a partner to improve market surveillance and provide trading and clearing information, with the aim of increasing transparency in the pseudonymous market.

Notably, the SEC is currently suing Coinbase for alleged violations of US securities laws.

In a separate lawsuit, digital asset investment firm Grayscale sued the SEC for denying its application for a spot Bitcoin ETF.

These legal battles highlight the challenges faced by companies seeking approval for a Bitcoin ETF and the importance of addressing regulatory concerns.

Legislation granting greater authority to the Commodity Futures Trading Commission (CFTC) to directly regulate the spot market for Bitcoin and other digital assets stalled last year due to the failure of FTX and litigation. involving Sam Bankman-Fried.

However, new legislation granting powers to the CFTC could reassure regulators considering ETF approval by addressing their concerns.

While the path to approval for a spot Bitcoin ETF remains unclear, Clayton’s comments indicate that demonstrating the efficiency and effectiveness of such an investment vehicle could significantly increase the likelihood of SEC approval.

As the cryptocurrency industry continues to evolve, market participants and regulators are scrambling to strike a balance between innovation and investor protection, paving the way for potential ETF opportunities to the future.

GrayScale protests with a direct letter to the Security and Trading Commission

In a recent development, digital asset investment firm Grayscale sent a letter to a judge expressing protest at the Securities and Exchange’s approval of a 2x Bitcoin leveraged exchange-traded fund (ETF). Commission (SEC) of the United States, when a similar approval was not granted for a spot Bitcoin ETF.

Grayscale’s letter raises a valid question about the regulatory disparity between these two types of investment products.

Grayscale argues that the approval of a 2x leveraged Bitcoin ETF implies that the SEC has recognized market demand and investor interest in gaining leveraged exposure to Bitcoin.

However, he wonders why the same recognition has not been extended to a spot Bitcoin ETF, which would provide investors with direct exposure to the underlying asset without any leverage.

The complaint highlights the inconsistency of the SEC’s approach and questions the logic behind approving one type of investment product and rejecting another that serves a similar purpose.

Grayscale argues that the SEC’s reluctance to approve a spot Bitcoin ETF is hampering investors’ access to a regulated and transparent vehicle to invest in the digital asset.

Grayscale is not alone in expressing its frustration: many industry players and investors have expressed disappointment with the SEC’s stance on spot Bitcoin ETFs.

They argue that a spot-regulated Bitcoin ETF would provide investors with an easier and more transparent way to access the cryptocurrency market, consistent with the SEC’s goal of protecting investors.

Grayscale’s letter highlights the need for regulatory clarity and consistency in the cryptocurrency industry.

He calls for a fair valuation of the Bitcoin ETFs on offer, highlighting the potential benefits such an investment vehicle could provide, including increased market liquidity, stronger investor protection, and greater market stability.

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