On January 10, U.S. asset managers are still optimistic about the Securities and Exchange Commission (SEC) allowing the trading of spot bitcoin exchange-traded funds (ETFs). Despite a misleading post on the SEC’s social media account falsely claiming approval, confusion arose on Tuesday.
On Wednesday, the SEC is set to decide on the application of Ark Investments and 21Shares to launch a spot bitcoin ETF. Additionally, there are over a dozen pending bitcoin ETF applications from companies like BlackRock, Fidelity, and VanEck awaiting the SEC’s decision.
SEC’s Bitcoin ETF Decision Amid Controversy
Industry insiders anticipate that the Securities and Exchange Commission (SEC) will greenlight the Ark/21Shares Bitcoin exchange-traded fund (ETF) along with other similar products. The ETFs are seen as potential game-changers, providing a way for both institutional and retail investors to gain exposure to Bitcoin without directly holding the cryptocurrency. This approval could significantly benefit the crypto industry, which has faced challenges due to various scandals.
However, the SEC has not disclosed its decision publicly, and a spokesperson stated that the agency cannot comment on ongoing applications. The anticipation was fueled by a misleading post on the SEC’s X account, asserting approval for all related products. This caused confusion among industry executives and media outlets, prompting the SEC to swiftly disavow and delete the post. The agency confirmed that its account was compromised, attributing the breach to an “unidentified individual” who gained control of a phone number linked to the SEC’s account through a third party. Authorities are currently investigating the incident.
Bitcoin ETF Prospects Amid Market Turbulence
On Tuesday evening, sources indicated that the recent apparent hack was not expected to derail the process of approving Bitcoin exchange-traded funds (ETFs). Despite the disruption, issuers proceeded to disclose their planned ETF fees, a crucial step typically finalized before a launch. At least three firms were in the process of filing or preparing requests for SEC approval to launch their products on Thursday, according to insiders.
Josh Gilbert, a market analyst at eToro, acknowledged that Tuesday’s hack had unsettled the Bitcoin market. However, he expressed confidence that all indications pointed toward the SEC approving the products. Standard Chartered analysts predicted that the ETFs could attract $50 billion to $100 billion in the current year alone, potentially driving the price of Bitcoin as high as $100,000. Other analysts were more conservative, estimating inflows to be around $55 billion over five years.
Andrew Bond, Managing Director and Senior Fintech Analyst at Rosenblatt Securities, emphasized the significance of ETF approval for the institutionalization of Bitcoin as an asset class. He noted that the approval would further legitimize Bitcoin, contributing to its recent 70% gain in value. The cryptocurrency briefly surged to around $48,000 following the fake post before retracting to below $45,000, maintaining stability around that level late Tuesday.
SEC’s Potential Shift on Bitcoin ETFs Amid Regulatory Concerns
The Securities and Exchange Commission (SEC) could be on the verge of a significant policy shift as it considers approving Bitcoin exchange-traded funds (ETFs), a move contradicting a decade-long stance. Historically, the SEC rejected bitcoin ETFs, citing concerns about their susceptibility to market manipulation. Even SEC Chair Gary Gensler, who has consistently asserted that bitcoin is not a security, maintained a tough stance on the broader crypto industry, accusing numerous firms of violating securities laws.
The shift in expectations emerged last year after a federal appeals court ruled against the SEC’s rejection of Grayscale Investments’ application to convert its Grayscale Bitcoin Trust (GBTC) into an ETF. This legal decision prompted the SEC to reevaluate its position, raising hopes for potential approval.
To address the SEC’s market manipulation concerns, issuers have taken proactive measures, collaborating with Coinbase Global, the largest U.S. crypto exchange. This collaboration involves surveillance of the underlying bitcoin market by two ETF listing exchanges.
Despite these efforts, some investor advocates remain skeptical, urging the SEC not to endorse the products, citing Bitcoin’s perceived immaturity. Gensler himself, on his personal X account, issued a warning on Monday about the exceptional risks associated with crypto asset investments.
Dennis Kelleher, CEO of Better Markets, seized on Tuesday’s fake tweet incident, emphasizing how it underscored the risks associated with bitcoin, stating, “This shows again why bitcoin is the preferred financial product of criminals worldwide.”
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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