The decision on Bitcoin ETF proposals from Bitwise and Grayscale has been postponed by the SEC.
Will the decision be postponed again?
The US Securities and Exchange Commission has this week postponed decisions on two Bitcoin ETF proposals. The requests came from the assets Grayscale and bitwise. SEC commissioners now have 45 days to review and approve or reject the proposals from Bitwise Bitcoin ETP Trust and Grayscale Bitcoin Trust. However, there is also a chance that the decision will be postponed again.
The difference between a Bitcoin spot and futures ETF
ETFs are investments that trade like stocks on traditional exchanges, making them more accessible to traditional investors and large institutional parties. Rather than showing an individual stock, ETFs track the price of a group of stocks or other assets.
While the SEC has still not approved a Bitcoin spot ETF, it did allow several Bitcoin futures ETFs earlier this year. These two ETFs are certainly not the same. A Bitcoin spot ETF would be directly linked to the price of BTC on spot exchanges. A Bitcoin futures ETF is linked to derivative markets, which investors use to hedge risk and/or predict the direction of price.
Will a miracle happen?
SEC chairman Gary Gensler said earlier this year that the committee will approve BTC futures ETF applications. This is because they are based on a different law than the spot ETF propose. According to him, the ‘Investment Company Act’ offers more investor protection.
Still, many people, including Congressmen Tom Emmer and Darren Soto, say Bitcoin futures ETFs are likely riskier than spot ETFs. They are a lot more complex.
“We wonder why if you feel comfortable allowing trading in an ETF based on derivative contracts, you don’t find it equally easy or more comfortable to start trading Bitcoin ETFs based on the spot price” , the representatives wrote in an open letter to Chairman Gensler. “Bitcoin spot ETFs are based directly on the asset, which inherently offers more protection to investors.”
While Congressmen Emmer, Soto and others are looking to see another Bitcoin spot ETF this year, chances are they will have to be patient. Unless, of course, a miracle happens. The SEC must make a decision on the Kryptoin Bitcoin Trust ETF by December 24.