The US Securities and Exchange Commission has postponed approval decisions for 4 Bitcoin ETFs (Exchange Traded Funds). The commission is claiming they will not be making any decision on the ETFs until the end of the year. The affected ETFs are from Global X, Kryptoin, Valkyrie and Wisdom Tree.
This is not the first time the SEC has delayed a decision on Bitcoin ETFs. The SEC has created a pattern where it delays making a decision while asking for public participation or giving little to no details on the reasons for the lack of a decision. It then ends up rejecting the proposal. This has led to some ETFs to withdraw their application.
There had however been optimism in the wider crypto community following the changes in SEC leadership earlier in the year. With the new chairman, Gary Gesler, coming in, it appeared that the team would favour ETFs. The optimism had led to several investment firms submitting applications for Bitcoin and Ether ETFs to the SEC over the past few months.
However, with this development, it seems the new leadership is following in the footsteps of past patterns.
The regulatory body has announced the new dates for review of the applications are 21st November for Global X, December 8th for Valkyrie, December 11th for Wisdom Tree and December 24th for Kryptoin’s application. There are still a lot more applications they are yet to review and provide any feedback on.
Will the SEC eventually approve ETFs?
The SEC tends to claim that it needs more time to look into the details of the applications before approving them. However, there is little likelihood that it will accept the applications. Instead, there are more chances of rejection if past actions are anything to go by.
There is the general consensus that the SEC is more interested in regulating the wider crypto market instead of ETFs alone. The SEC chair, Gesler had on previous occasions expressed support for an ETF tracking Bitcoin investments. He believes the crypto market is still open to price manipulation which makes ETFs a risky investment option.
The history of SEC and ETF rejections
The history of the SEC rejecting crypto ETFs is quite long. As early as 2018, the regulator had already rejected an application by the Winklevoss twins to operate a Bitcoin ETF.
VanEck and SolidX then partnered to apply for a rule change from the SEC. In this case, they were looking to provide a single Bitcoin ETF to a select group of financial institutions. The application was rejected, after which they made a few changes then resubmitted it to the commission. This was again rejected.
VanEck tried again in December 2020 with no success. It then applied for an Ethereum futures fund in August 2021, which it shortly withdrew. The same pattern can be said of other crypto firms.
Even though the crypto market is becoming more mainstream, there’s no indication the SEC will approve any Bitcoin ETF this year.