Analysts Say SEC Might Approve Bitcoin ETFs In 2023

March 26, 2022 1:43 pm

Analysts are saying that the major reason why the SEC right now has so far denied all proposals for Bitcoin ETFs is due to the fact that there are exchanges that are non-compliant.

Once they do become compliant, there should be no other reasons that the SEC could use to continue denying the proposals for Bitcoin and other related crypto ETFs.

In the way that the exchanges could immediately be considered compliant with the SEC comes with a new amendment to the definition of what an “exchange” is that was just proposed last January.

Essentially, this new rule being introduced could make most crypto platforms compliant once it passes which will make it the catalyst for Bitcoin ETFs finally being approved.

CoinTelegraph shares how it works:

Eric Balchunas and James Seyffart, exchange-traded fund (EFT) analysts for Bloomberg, said that a proposed rule change with the United States Securities and Exchange Commission (SEC) could be the catalyst for the regulatory body approving a spot Bitcoin ETF in mid-2023.

In a Thursday tweet, Balchunas said crypto platforms could fall under the SEC’s regulatory framework if the commission were to approve the amendment to change the definition of “exchange” proposed in January.

The rule change would amend the Exchange Act to include platforms “that make available for trading any type of security” — seemingly including cryptocurrencies, making their investment vehicles more palatable for the regulator.

“Once crypto exchanges are compliant, the SEC’s primary reason for denying spot Bitcoin ETFs would no longer be valid, likely clearing the way for approval,” said the analysts.

This amendment change to the Exchange Act could take place sometime later in the year or early of 2023 next year which gives investors a rough timeline.

The SEC is known for so far denying all proposals for getting Bitcoin or crypto related ETFs listed on exchanges and has only approved futures so far.

As a result, many investors and institutions looking for exposure to the crypto markets via the use of these ETFs have only been restricted to ETF markets in markets outside of the United States.

Lawmakers within the US were also not in support of the SEC’s actions to deny the listings as representatives from Congress have sent a letter to the SEC chairman Gary Gensler to challenge the SEC’s rejections of the ETF listings.

As a result, there were worries from other parties within the government that this would cause the United States to be behind the curve on crypto ETFs which could stifle innovation.

CoinDesk concludes:

“Expanding the definition of an exchange could eliminate the agency’s primary objection to the products by bringing cryptocurrency platforms under the SEC’s regulatory framework,” Seyffart and Balchunas wrote.

“Once crypto exchanges are compliant, the SEC’s primary reason for denying spot Bitcoin ETFs would no longer be valid, likely clearing the way for approval,” they added.

The two expect the change to be finalized sometime between November of this year and May of 2023.

Meanwhile, the SEC has continued to deny or extend reviews on all the applications for U.S. spot bitcoin ETFs that have been submitted to it, citing concerns about protecting investors.

The timing of this change could come in handy as more and more institutions start to offer crypto trading services to their clients.

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