Spot Bitcoin ETF Approval by U.S. Highly Likely, Says Bernstein
The absence of a bitcoin spot ETF has led to the proliferation of over-the-counter products like the Grayscale Bitcoin Trust (GBTC), which are more costly, illiquid, and inefficient, according to the brokerage firm.
Because Bitcoin
July 3, 2023
CoinDesk reported that Bernstein, a brokerage firm, stated in a research report on Monday that the U.S. Securities and Exchange Commission (SEC) holds a challenging position regarding spot Bitcoin exchange-traded funds (ETFs), but the likelihood of approval is reasonably high.
According to Bernstein, the SEC has already permitted Bitcoin ETFs based on futures and recently granted approval for leverage-based futures ETFs based on the understanding that futures pricing is derived from a regulated exchange like the CME. The SEC's belief, as outlined by analysts led by Gautam Chhugani, is that a spot Bitcoin ETF would be unreliable due to the lack of regulatory oversight on spot exchanges such as Coinbase, making spot prices susceptible to manipulation.
Despite receiving numerous applications, the SEC has not yet approved a spot Bitcoin ETF. Last month, a unit of Blackrock submitted paperwork for the establishment of a spot Bitcoin ETF, which prompted other asset managers like Invesco and Wisdom Tree to apply or reapply for a Bitcoin ETF product.
The research report also highlighted Grayscale's attempt to convert its Grayscale Bitcoin Trust (GBTC) into an ETF, a matter currently before an appeals court. The analysts noted that the court seemed skeptical about the distinction between futures and spot prices, making it challenging for the courts to permit a futures-based ETF while disallowing a spot-based ETF.
Furthermore, the industry has proposed a surveillance agreement between spot exchange operators and regulated exchanges like Nasdaq, aiming to address concerns. This agreement would add an additional layer of oversight.
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