The U.S. Securities and Exchange Commission (SEC) has found the recent applications for spot Bitcoin exchange-traded funds (ETFs) from major asset managers like BlackRock, ARK Invest, and Fidelity to be deficient in clarity and comprehensiveness.
SEC Requests More Clarity on Bitcoin ETF Filings
Prospective hopes for a quick realization of a spot Bitcoin ETF in the United States may have to be pushed back. The SEC, the chief financial regulator, has deemed the recently submitted applications to be wanting in their current form.
The Wall Street Journal reported that the SEC conveyed to the Nasdaq and the Chicago Board Options Exchange (Cboe), acting on behalf of the asset managers, that the filings need to provide greater transparency and depth.
The Missing Elements in ETF Applications
The SEC’s point of contention centers around the lack of a named spot Bitcoin exchange involved in a “surveillance-sharing agreement.” The commission also noted an absence of adequate information regarding the particulars of these surveillance arrangements. Despite these issues, the asset managers have the opportunity to amend and resubmit their filings.
A wave of applications have been lodged in recent weeks, with BlackRock’s entry inciting a surge in interest to establish the first spot Bitcoin ETF on Wall Street. BlackRock’s application featured a “surveillance sharing agreement” to promote data sharing about market trading and clearing activities, thereby aiming to curtail any chances of market manipulation.
This application prompted ARK Invest and 21Shares to alter their third application to incorporate a similar surveillance agreement. Several other asset managers, including Invesco, WisdomTree, Valkyrie, and Fidelity, have made comparable changes or refiled their applications. Among these, ARK Invest is purportedly leading the pack.
Understanding the Significance of ETFs and Their Status in the Crypto Sphere
ETFs, which track specific indices and are typically traded on exchanges, are a pivotal part of financial markets. In the crypto realm, a fund mirroring the price of one or several digital tokens, and comprising diverse cryptocurrencies, is referred to as a cryptocurrency ETF.
Despite numerous attempts, the SEC has been denying spot Bitcoin ETFs since 2017. In contrast, Canada has already approved this type of financial product, with significant funds like Purpose Bitcoin, 3iQ CoinShares, and CI Galaxy Bitcoin directly invested in spot Bitcoin.
The Impact of Spot Bitcoin ETFs Approval on the Market
Approval of spot Bitcoin ETFs is a significant milestone for the cryptocurrency industry for several reasons. First, it paves the way for institutional investors to get involved in the Bitcoin market without the need to directly own the cryptocurrency. This form of access can potentially drive a new wave of institutional money into Bitcoin.
Secondly, Bitcoin ETFs can serve as a benchmark for the entire cryptocurrency market. These financial products can lead to greater liquidity and improved price discovery for Bitcoin, making the market less volatile and more attractive to institutional and retail investors alike.
Finally, the validation of Bitcoin ETFs by a significant regulatory authority such as the SEC would represent a major step towards the mainstream acceptance of Bitcoin as a legitimate asset class. Such recognition could boost Bitcoin’s credibility and attractiveness, leading to broader adoption and potentially higher prices.