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Bitcoin ETF Hurdles and Hope: SEC Updates

Martin Walker
Sep 29, 2023 at 08:17 am

The Securities and Exchange Commission (SEC) in the United States has once again decided to postpone the assessment of Bitcoin ETF applications from major financial players like BlackRock, Valkyrie, Invesco, and Bitwise, as per recent filings on September 28. This move has caught the attention of both industry experts and enthusiasts alike.

Speculation is rife that this delay might be intricately linked to the looming risk of a U.S. government shutdown on October 1, which, if it materializes, could potentially have far-reaching effects on the smooth operation of various federal entities, including the SEC, whose role as a financial regulator is vital to the stability of the financial markets.

Bitcoin ETF Applications Face Postponement by SEC

The competition to introduce a spot Bitcoin ETF in the U.S. has captivated considerable interest within the industry. Being the first successful applicant could translate into a significant advantage, pioneering a highly lucrative market. Presently, ten firms have pending applications at the SEC, all vying for the opportunity to launch Bitcoin ETFs and grab a slice of the crypto pie.

It's worth noting that this isn't the first time the SEC has delayed decisions on Bitcoin ETF applications. In August, the regulatory entity had already postponed determinations on proposals from BlackRock, Invesco, Bitwise, and Valkyrie. The SEC had earlier rejected multiple ETF applications, expressing concerns about potential fraudulent activities and market tampering, which it deemed as reasons why such products should not be traded in the U.S.

Analyst Raises Chances for Bitcoin ETF Approval

Recent legal developments have ignited speculation regarding the potential endorsement of a Bitcoin ETF. A federal court triumph by Grayscale Investments has further kindled this speculation, leading market analysts to contemplate the increasing likelihood of the SEC being more amenable to approving such ETFs in the near future.

Although these recent postponements have altered the decision timeline, the SEC will need to make a definitive decision by mid-March, adhering to the third set of deadlines for the seven involved firms. This timeline adds an element of anticipation to the already high-stakes Bitcoin ETF race.

In late August, Eric Balchunas, an ETF analyst at Bloomberg, elevated the probability of a spot Bitcoin ETF gaining approval by the conclusion of 2023 to 75%. This alteration in outlook is attributed to the U.S. Court of Appeals Circuit’s ruling in favor of Grayscale, significantly impacting the likelihood. Balchunas has since bolstered those odds to an impressive 95% by the termination of 2024, reflecting a burgeoning optimism within the cryptocurrency sector regarding the eventual approval of Bitcoin ETFs in the United States. The crypto world is indeed watching these developments closely, as they could reshape the landscape of digital asset investment.

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