The U.S. SEC "typically" delays all Bitcoin spot ETF decisions; is there still a possibility of approval?

Compiled by: Felix, PANews

On August 31, documents showed that the U.S. SEC postponed its decision on the proposed rule changes from Fidelity (Wise Origin), VanEck, WisdomTree, and Invesco, all of which intend to issue a Bitcoin spot ETF through Cboe's BZX exchange. Applications from other companies, including Valkyrie Investments and BlackRock (iShares), were also postponed; these two companies plan to issue ETFs through Nasdaq. Another postponement involves Bitwise, which intends to offer its ETF through NYSE Arca.

Most Decisions Postponed to October 17

Documents indicate that the U.S. SEC has postponed the new deadline for decisions on applications from WisdomTree, Invesco Galaxy, Wise Origin, VanEck, and BlackRock to October 17. The decision on Valkyrie has been postponed to October 19, and the decision on Bitwise has been postponed to October 16.

Bitcoin Drops in Response

In response to this news, according to CoinGecko data, the price of Bitcoin continued to decline. As of September 1, 12:00 PM (Beijing time), Bitcoin had dropped 4.1% in the past 24 hours to $26,077.99. The previous gains in Bitcoin, driven by news of Grayscale's victory in its lawsuit against the SEC, were erased.

Why the Delay?

Similar to previous delays, the U.S. SEC stated in the latest batch of documents that the postponement "provides sufficient time to consider the proposed rule changes and the issues raised therein."

It is reported that the regulatory agency has a total of 240 days from the initial review of the application to make a final decision to approve or deny. SEC staff traditionally use all possible opinions and review periods to delay making a final decision until the 240 days are up. Therefore, this delay is also in line with certain expectations. Currently, the regulatory agency has at least 45 days to process these proposals, after which the U.S. SEC can approve, deny, or postpone its decision again.

Possibility of Approval Remains

The latest set of Bitcoin spot ETF applications and proposed rule changes is widely considered promising. BlackRock, which manages over $9 trillion in assets, made headlines in June when it applied for a Bitcoin spot ETF as one of the first applicants in this round of proposals. Favorable factors for BlackRock's proposal include its high success rate with past ETF proposals (note: BlackRock has a record of 575 approved ETFs and only 1 rejection), and its proposed Bitcoin spot ETF relies on a monitoring-sharing agreement with Coinbase.

It was BlackRock's application that prompted other companies that had previously attempted to launch such products to refile their applications. As a result, some believe that if BlackRock is approved, all similar applications will also be approved.

Additionally, on August 29, the D.C. Circuit Court issued a ruling favorable to Grayscale, with the judge stating that the SEC's rejection of Grayscale's Bitcoin spot ETF was unreasonable, applying a double standard between Bitcoin spot and derivatives, yet failing to explain the necessity of such a double standard, and requiring the SEC to reconsider Grayscale's request. Bloomberg ETF analyst James Seyffart stated that while this does not mean GBTC will automatically convert to an ETF, it does bring Bitcoin spot ETF approval closer. Grayscale's CEO indicated that it is still uncertain whether it is necessary to resubmit the spot Bitcoin ETF application to the SEC, and attention should be paid to the court's final authorization.

Currently, it is unclear whether the U.S. SEC will again postpone its decision when the next deadline arrives. However, each of the aforementioned companies' previous Bitcoin spot ETF applications had been rejected by the SEC. If the SEC decides to reject the latest round of ETF proposals in October, applicants may submit new applications, restarting the cycle of approval, delay, and rejection.