According to agency filings on Thursday, the Securities and Exchange Commission (SEC) has delayed making a decision on all of the spot bitcoin exchange-traded fund (ETF) applications filed earlier this year by applicants including BlackRock, WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise, and Valkyrie Digital Assets until October.
Bitcoin (BTC), which was already down significantly on the day, plummeted even lower on the news, down 4.1% in the last 24 hours to $26,100.
Last month, the SEC began assessing the current round of applications from crypto-heavy and traditional financial organizations such as Wise Origin (Fidelity), BlackRock, and Invesco Galaxy. The applicants seek to establish the first spot bitcoin ETF, which supporters believe would allow for more retail investing in the bitcoin field while saving investors the bother of setting up a wallet or buying bitcoin directly.
The SEC’s directives today postpone any definite judgement, instead extending existing comment periods and allowing for further public input on the applications. The revised deadlines for Wise Origin, Galaxy, and WisdomTree are October 17, with Valkyrie following two days later. Bitwise’s new deadline is October 16th.
The agency has 240 days from the start of its consideration of the applications to reach a final judgement on whether to approve or refuse them. The SEC has always used every feasible comment and review opportunity to postpone making final conclusions until that 240 days have passed, so Thursday’s agency filings are expected.
The D.C. Circuit Court of Appeals ruled earlier this week that some of the SEC’s arguments in rejecting bitcoin ETF applications appeared “arbitrary and capricious,” after Grayscale argued that the SEC lacked a firm basis to reject its bid to convert the Grayscale Bitcoin Trust into an ETF. Grayscale and CoinDesk are both owned by Digital Currency Group.
According to Judge Neomi Rao, writing for the unanimous court, the SEC’s denial of the application was inconsistent with the approval of a pair of bitcoin futures ETFs, and the SEC did not explain why it viewed these types of products differently given the underlying bitcoin market’s “99.9% correlation” between spot and futures market prices. Grayscale’s claim that its proposed ETF was “materially similar” to the S&P 500.
“First and foremost, the underlying assets – bitcoin and bitcoin futures – are highly correlated.” Second, the surveillance sharing arrangements with the CME are equivalent, with the same possibility of discovering fraudulent or manipulative behavior in the bitcoin and bitcoin futures markets,” she stated.
Similar grounds were utilized by the SEC in rejecting other ETF applications as it did in rejecting Grayscale’s proposal. The appeals court instructed the regulator to reconsider the application.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.