Bitcoin Spot ETFs: No Basis To Not Approve, Grayscale Tells SEC
The US Securities and Exchange Commission is the apex regulatory agency for financial trading instruments. The agency has recently received quite a number of applications for crypto-based trading instruments to be approved on the stock exchange. But the SEC has only approved a few Bitcoin futures ETFs and ETPs in the last two months.
The SEC rejected a Bitcoin spot ETF submitted by investment management firm, Van Eck. in its report, the agency noted that it refused to grant approval to crypto spot ETFs because it feels that they are riskier than the futures ETF. The crypto community responded, saying that Bitcoin futures ETFs are in fact riskier than the Bitcoin spot ETFs.
In a new development, one of the biggest crypto investment companies, Grayscale Investments, has written a letter to the SEC secretary. The letter addresses the loopholes in the SEC’s recent rejection of Van Eck’s Bitcoin spot ETF and suggests that the SEC was technically wrong to have rejected it. In the letter, Grayscale says the SEC has ‘no basis’ to reject the crypto spot ETF.
All For One, One For All
One could say that Grayscale’s letter to the SEC arguing the latter’s rejection of Van Eck’s Bitcoin spot ETF is partly in solidarity for the investment company and also to make its position known. Grayscale has a Bitcoin Trust and has said that it would file an application for a bitcoin spot ETF which it hopes would be approved by 2022.
Following the SEC’s rejection of Van Eck’s application, some other investment companies withdrew their bitcoin spot ETF applications and hinted that they would file future applications. However, no one knows when the SEC will permit crypto-based spot ETFs. If the agency says no for the next 36 months, what happens?
Given the growing appetite and interest of investors to have some exposure to crypto spot ETFs, investment companies such as Van Eck and Grayscale cannot wait for the SEC to reach a decision by itself. This explains the purpose of the letter. Some social media users, especially on Twitter, have criticized the SEC for not making an “acceptable” decision on crypto-spot ETFs.
Grayscale drove the nail home in its letter where it said that the SEC’s decision was contrary to the provisions of the Administrative Protections Act (APA). It said that the SEC made a distinction between Bitcoin spot and futures ETFs instead of seeing both products as derivatives of the underlying asset.
Crypto May Be Regulated in The US
We may not be far from having crypto regulations in the US. As reported by local media, the US Capitol has been discussing the crypto industry for a while now and is set to take action soon. There are several regulatory frameworks already proposed by a number of agencies and committees.
As of writing, the SEC has neither replied to the letter nor made any public announcement about the crypto-based ETFs applications on its desk.
Whatever happens, crypto investments continue to grow, for now.
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