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1 September 2023 was the deadline for the US Securities and Exchange Commission to decide on whether it will approve applications for spot bitcoin exchange-traded funds.
BlackRock, Fidelity, Invesco, VanEck and WisdomTree are amongst the traditional asset managers that have applied for regulatory approval to launch spot bitcoin ETFs. Bloomberg Intelligence reported that decisions on all the applications have been extended for 45 days.
The next deadline for a decision will be 16 October 2023.
The decision was expected to be extended after the SEC lost a case this week in the D.C. Circuit Court of Appeals against Grayscale Investments, the digital currency asset manager. Grayscale had challenged the decision by the SEC to deny the conversion of the Grayscale Bitcoin Trust to an exchange-traded fund, despite the regulator having approved bitcoin futures ETFs.
The ruling said: “The Commission failed to adequately explain why it approved the listing of two bitcoin futures ETPs but not Grayscale’s proposed bitcoin ET. In the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful.”
Michael Sonnenshein, chief executive of Grayscale, said in a statement that the asset manager has adhered to U.S. financial rules and regulations in building products since its founding in 2013. He said: “It’s incredibly exciting that we are one step closer to making a U.S. spot Bitcoin ETF a reality.”
Townsend Lansing, head of product at CoinShares, the European digital asset manager, said in a blog that the SEC can appeal, rescind its previous rejection and then re-review Grayscale’s application or concede defeat. He believes there will likely be additional political impetus to approve spot bitcoin ETFs, given applications from firms like BlackRock.
Lansing said: “No matter what happens, the Court’s decision has definitely put the SEC on the back foot and dramatically improved chances for the approval of a spot bitcoin ETF.”
In Europe Jacobi Asset Management has listed the region’s first spot Bitcoin ETF on Euronext Amsterdam, which was approved by the Guernsey Financial Services Commission.
Crypto ETPs are already listed in Europe but Martin Bednall, chief executive of Jacobi, explained that the structure of an ETF and ETP are very different. He said ETPs are debt instruments issued by a special purpose vehicle which owns the physical Bitcoin. In contrast, ETF investors buy fund units which have direct ownership of physical Bitcoin held in custody under a trust arrangement, in this case Fidelity Digital Assets.
Bednall said in a statement: “It is exciting to see Europe moving ahead of the US in opening up bitcoin investing for institutional investors who want safe, secure access to the benefits of digital assets using familiar and regulated structures like our ETF.”
