The anticipated approval of an upcoming bitcoin exchange-traded fund has rekindled excitement. Ten years after the crypto sector first attempted to develop a bitcoin ETF, the financial behemoth BlackRock’s entry into the battle for an ETF has sparked optimism that the Securities and Exchange Commission will ultimately approve the much anticipated product.
The first cryptocurrency exchange-traded fund (ETF) was set to debut in July 2013 thanks to a filing by Cameron and Tyler Winklevoss. The market is still searching for a spot cryptocurrency solution eleven years later.
If approved, a bitcoin ETF will allow a sizable portion of American ordinary investors to make purchases in bitcoin without having to worry about setting up a digital wallet or deal with occasionally finicky cryptocurrency exchanges. In addition, a regulated (and hence “safe”) bitcoin product would allow experienced investors like multimillion dollar family offices to make investments. These are a few of the arguments in favor of the Securities and Exchange Commission approving an ETF.
The Upcoming Insights on the Crypto Coins
The first cryptocurrency exchange-traded fund in North America was approved by the Ontario Securities Commission more than two years ago, which raised hopes that an American product would soon follow suit. The U.S. Securities and Exchange Commission granted approval for the first bitcoin futures ETF later in 2021, paving the way for a number of other related products.
Although there is currently no physical bitcoin ETF trading in the United States, BlackRock’s registration a few weeks ago gave the industry a hint that a change may be coming soon. There have been six new proposals for an exchange traded fund for bitcoin in the US over the last several weeks. Has the market advanced sufficiently to justify an ETF, and can businesses convince the SEC that an ETF would be financially secure?
With some urging from the SEC, the main difference we are noticing right now is that the candidates devote more time discussing their surveillance-sharing arrangements. All of the major prospective ETF issuers that have so far chosen a partner—Nasdaq and Cboe BZX on their behalf BlackRock, Fidelity, VanEck, and others—will trade on Coinbase.
Agreements for the sharing of surveillance have previously been raised by the SEC. The regulator issued a 112-page order in 2019 explaining why it had rejected Bitwise’s application for a bitcoin exchange-traded fund (ETF). The order stated that the regulator needed a “surveillance-sharing acceptance with an approved market of substantial magnitude connecting to the underlying assets” to prevent any potential influence of the bitcoin market.
One issue is that an authorized market of sufficient size lacks a clear definition, according to James Seyffart, a Bloomberg Intelligence analyst who has been following bitcoin ETF filings for years. I assume that one of the explanations for why these businesses are considering Coinbase as a partner for the surveillance-sharing deal is because the SEC’s case against the exchange has anything to do with its bitcoin market.
The SEC’s agreement that Coinbase maintains a major regulated bitcoin market remains to be seen, and whether or not that is required for approval. The regulatory body didn’t appear to believe that there was an official market for bitcoin last year. The SEC specifically said that “spot bitcoin exchanges are not currently’regulated,'” in a footnote explaining how surveillance-sharing arrangements for the bitcoin futures marketplace wouldn’t work for spot ETFs, when it accepted in April 2022.
So this can be a good news for some while not for others. So depending on the investments in the crypto fields, the investments can be seen and guaranteed.
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