By George Ward
Commissioner Hester Peirce Leads ETF Push
According to the SEC commissioner, the US Securities and Exchange Commission (SEC) is reviewing several applications for the first-ever spot Bitcoin exchange-traded fund (ETF). The anticipated approval of a spot Bitcoin ETF has long been a goal of some of the crypto industry’s most ardent supporters, who believe it will increase the asset class’s credibility.
They also believe that the ETF would provide a simple and regulated route for institutional investors and retirement funds to invest in Bitcoin on behalf of their clients. Accordingly, Commissioner Hester Peirce has taken a stance to support spot Bitcoin ETF approval, stating that there is no reason for the regulator to obstruct the launch of this new crypto product.
Peirce spoke in a recent interview about the SEC’s process for assessing spot Bitcoin ETF filings and its oversight of the cryptocurrency industry. Peirce reiterated her long-standing transparent stance when asked about the ongoing discussions between applicants seeking spot Bitcoin ETF approval.
The Race For Spot Bitcoin ETF
Meanwhile, the Federal Register has published the spot Bitcoin ETF applications recently filed by some of the world’s largest asset managers, bringing them closer to possible approval in the regulator’s review process. It is worth noting that the Federal Register is the official journal of the United States government, and publishing ETF applications there allows the SEC up to 240 days to approve or deny the numerous filings.
Notable asset managers with filings for ETF products include ARK 21 Shares, Bitwise, BlackRock, Fidelity, Invesco Galaxy WisdomTree, VanEck, and Valkyrie. The most significant change to the re-filed applications was the addition of Coinbase as the exchange partner for surveillance-sharing agreements (SSA), which many industry observers believe was the critical missing piece from previously rejected spot BTC ETF filings.
When a company joins an SSA, it agrees to share information about the market trading activity, clearing activity, and customer identity. Coinbase consistently accounts for over 50% of BTC/USD spot trading in the US as it is the number one crypto exchange by trading volume in the country, which is why the various ETF filings chose it as the SSA partner.
Peirce’s Insights On The SEC-Grayscale Impasse
The SEC commissioner has criticized the securities watchdog for denying Grayscale Bitcoin Trust’s (GBTC) transformation into an ETF. However, the court’s ruling against the SEC’s denial in the Grayscale case has prompted a reconsideration by the commission.
Recall that the court overturned the regulator’s denial of Grayscale’s spot Bitcoin ETF conversion move, calling the decision “arbitrary and capricious.” The court also stated that the SEC has failed to explain why it treated similar products differently.
Grayscale had asked the court to revert the SEC’s decision to convert its GBTC to an ETF that the regulator would oversee and regulate. While Peirce backs the approval of a spot Bitcoin ETF, industry observers believe that a broader assessment of the market’s maturity and risk factors must be considered before these asset managers launch this investment product.
Meanwhile, a JPMorgan analysis opined that the US SEC’s approval for Grayscale to convert its GBTC to a spot ETF could result in $2.7B in outflows. The report added that this colossal outflow would cause a severe decline in BTC’s value.