Is a spot Bitcoin ETF necessary? Most likely not. However, the US may require one or two. Complete evidence of concepts operating and absorbing capital already exists in other nations. The SEC believes that a spot bitcoin ETF would cause issues, but none of those products exhibit any of those issues. Furthermore, future Bitcoin ETFs are already operating trouble-free in the United States. What exactly is causing the spot bitcoin ETF to be delayed?
Companies are vying with each other all the time to be the first to launch the fabled spot Bitcoin ETF. They keep getting proposals rejected by the SEC one after the other. Is all of this happening for a reason? Bitcoinist began by explaining the situation and going after Chairman Gensler on behalf of the Chamber of Digital Commerce. However, their report had more pertinent details. There are several justifications for why, before it’s too late, the SEC must approve a spot bitcoin ETF.
The US Requires A Bitcoin ETF Spot
The Chamber of Digital Commerce makes some compelling arguments in “The Crypto Conundrum: Why Won’t the SEC Approve a Bitcoin ETF?” that is difficult to disagree with. But the text also reads as a warning followed by a plea. The report is strange, but its contents could be more coherent.
“The substantial market demand for bitcoin, particularly at the institutional level, cannot be denied by the SEC. However, in the absence of a Bitcoin ETF, an investor wishing to invest directly in bitcoin will not have the federal securities regulatory protection that has grown over the previous 80 years.”
This flatly refutes Chairman Gensler’s claim that the SEC won’t approve a spot bitcoin ETF to safeguard the general public’s lack of knowledge. The Chamber of Digital Commerce isn’t telling you that if you take on the responsibility, it’s simple to self-custody your bitcoin. For the first time, property rights are accessible to regular investors thanks to Bitcoin.
The market is mature, institutions are involved, and overseas examples exist. Yet, the SEC still uses the same old reasons to reject Bitcoin ETFs, despite thorough research showing their concerns are unfounded.
In 2013, the twins applied for the first time to create a spot Bitcoin ETF. Several institutions with staff, tradition, and an endless budget have tried and failed since then. According to the Chamber of Digital Commerce, institutions will only give up trying if they believe that their applications will succeed regardless of what they do. And innovation will be hindered by it.
BTC price chart for 09/15/2022 on FX | Source: BTC/USD on TradingView.com
The CME And The Price Discovery Of Bitcoin
As per The Chamber, “an applicant must demonstrate that price discovery on bitcoin takes place on the CME, an unprecedented requirement that the SEC has placed on the industry and is exclusive to bitcoin.” According to the organization, they would require approval for a spot in Bitcoin ETF. Something they wouldn’t inquire about from more conventional goods. Thus, as it happens…
The most intelligent players in the market created and carried out research projects that demonstrated that price discovery for Bitcoin does happen on the CME on a statistically meaningful basis. Even though the SEC’s requirements have been fulfilled, it has kept its denials.
The SEC’s analysis of Bitcoin price discovery on the CME lacks consistency, raising questions about its significance. Despite approving several Bitcoin Futures ETFs in October 2021, the SEC now appears uncertain about the impact on pricing.
The Bitcoin Environment Has Modified
The SEC is aware of this. Both the Bitcoin network and the surrounding institutions have changed over time.
Regulated players now navigate the Bitcoin ecosystem, protecting client assets and mitigating early-stage vulnerabilities. Investing in a Bitcoin ETF allows individuals to delegate due diligence to experts, gaining exposure without directly navigating the complexities of the market.
Therefore, the Chamber disregards Bitcoin users for what they believe to be a greater good. The product and the ease of paper bitcoin will benefit many users, and the US needs a spot bitcoin ETF. But those users could just as quickly learn how to self-custody Bitcoin as an asset, do their research, and call it a day.
“The SEC will now start defending why it rejected the Grayscale application in court. In the months preceding the SEC’s ruling on Grayscale’s application, Grayscale made it clear that it would file a lawsuit if its application was denied, claiming that doing so would violate the Exchange Act and the American Palisades.
Grayscale suing the SEC shows frustration with regulatory roadblocks.
- The Chamber of Digital Commerce echoes this sentiment, urging “concentrated efforts.”
- Their report warns: without action, legal battles or political pressure might be needed.
- Time may be running out to break through the SEC’s perceived “arbitrary” stance on Bitcoin ETFs.
