Is a US Spot Bitcoin ETF On The Way?
The U.S. Securities and Exchange Commission’s in early April approved a bitcoin futures exchange-traded fund (ETF) from Teucrium based on different laws. This approval has boosted crypto investors and fund issuers with renewed optimism that a spot bitcoin ETF will finally get the green light soon.
SEC Commissioner Hester Peirce, known as “Crypto Mom” within the crypto community for her dissent to the SEC’s decision to reject a bitcoin ETF proposed by Winklevoss twins in March last year, also said that she is “confident” that a bitcoin ETF will be approved “eventually.
Many investors have said there is no possibility of a spot bitcoin ETF getting approved this year given the SEC’s numerous rejections based on concerns about the lack of investor protections and appropriate market surveillance. The list of rejected applications from Bitwise, WisdomTree, Fidelity and Ark 21 Shares have all been rejected.
But Teucrium’s ETF, which will trade on the NYSE Arca, is different in that it is a futures-based ETF. The fund will invest in bitcoin futures contracts traded on either the Chicago Mercantile Exchange (CME) or the Chicago Board Options Exchange (CBOE).
The successful application from Teucrium was filed under the “33 Act” (or the Securities Act of 1933) and the “34 Act” (or the Securities Exchange Act of 1934), rather than the “40 Act” (the Investment Company Act of 1940) that the SEC approved all previous bitcoin futures ETFs under.
Craig Salm, chief legal officer for Grayscale Investments said that, “The SEC is now not only comfortable with futures-based ETFs regulated under the 40 Act and all the investment protections there, but also futures-based ETFs regulated under the 34 and the 33 Act, the same act that these spot-based ETFs will be regulated under,”. He continued, “That gives us a lot of optimism that the SEC will approve a spot-based bitcoin ETF sooner rather than later.”
Dave Abner, who is the head of global business development for crypto exchange Gemini also said he was encouraged by the latest development.
While a bitcoin spot ETF is still yet to be approved by the SEC, the fact that the regulator is now comfortable with futures-based ETFs gives investors hope that a spot ETF might not be too far away. The approval of the Teucrium Bitcoin Futures Fund also paves the way for other similar products to launch in the future.
The US SEC has yet to approve a bitcoin ETF, but that hasn’t stopped companies from trying. There are currently several applications pending review, with the most recent one filed by Bitwise Asset Management.
The ETF application from Bitwise is still pending review with the SEC, with a final deadline set for June 29. The VanEck SolidX Bitcoin Trust, which was first filed in early 2018, is also still waiting for approval.
While declining to directly address the state of the application, Matt Hougan, Bitwise’s chief investment officer, said “we’re making progress.”
“We’re sort of in a crawl, walk, run series,” Hougan said, adding that the Teucrium approval is no guarantee that the industry will see a spot bitcoin ETF approved soon. “But it doesn’t guarantee that we won’t either,” he said.
George Sutton, who is an institutional research analyst at Craig-Hallum, believes that a spot bitcoin ETFs will eventually be approved but that may first require a change of administration.
“I think there is a good possibility that we could see a bitcoin ETF approved in the next 12 to 18 months, but I think it will be more likely under a new administration, specifically if President Biden is not reelected,” Sutton told MarketWatch.
Sutton also said he thinks an SEC-approved bitcoin ETF would need to have insurance against loss or theft, which he doesn’t think is currently available.