Financial Advisors Are Frustrated Because SEC Is Blocking Spot Crypto ETFs

April 11, 2022 6:51 pm

The launch of spot crypto ETFs is actually in very high demand within the United States as a survey shows that around 72% of them are willing to invest in crypto if ETFs were available.

The survey was conducted by the NASDAQ stock exchange and indicates that there has already been large institutional interest in the space, but a lack of investment options on the market.

The lack of options can be specifically tied to the SEC which has continually denied all proposals to launch crypto ETFs within the North American market.

So far, the data is showing that this may be one of the biggest obstacles today for crypto because it is actually one of the biggest things that is preventing more institutional adoption.

A breakthrough in this area could possibly increase the crypto market size by multiple factors and even become a catalyst for another crypto bull run.

CryptoBriefing reports:

New data suggests that the absence of spot crypto ETFs could be what’s standing between crypto and increased institutional adoption.

According to a Monday Nasdaq report, which surveyed 500 U.S.-based financial advisors who were either investing or considering investing in crypto, 72% of advisors would be more likely to invest in the asset class if a spot crypto ETF was available in the country.

Unlike futures-based crypto ETFs, which track the price of the underlying assets using derivatives and must therefore roll their positions forward regularly, spot ETFs hold crypto directly and can hold their positions indefinitely.

Only 38% of the surveyed advisors said that they think it is likely that the SEC would approve such a product by the end of the year, while 31% thought the opposite.

The most impressive part of the report was that basically 0% of the advisors planned to decrease their allocations in crypto and that 86% planned to increase their allocations within the next year.

Almost half of them are currently using Bitcoin future ETFs which are the only type of financial instrument that is not currently blocked by the SEC that allows institutions to gain exposure to the market in some way.

With that being said, financial advisors are indicating that the release of crypto indexes would ultimately become a game changer as that would be able to provide their clients with a broad level of exposure to crypto.

As always though, it seems somewhat unlikely that the SEC would break its current pattern of rejecting all proposals for such an index or ETF.

CoinTelegraph reports:

“Investors deserve a choice of a spot BTC ETF and Grayscale conversion would be the most effective and efficient at doing so,” said Maryland resident Lance Lewis.

Bloomberg analysts Eric Balchunas and James Seyffart suggested in March that the SEC could approve a spot Bitcoin ETF in mid-2023 based on a proposed amendment to change the definition of “exchange” within the regulatory body’s rules.

However, Nasdaq’s survey of financial advisers found that only 38% thought it was likely the SEC would approve a spot crypto ETF sometime in 2022, with 31% saying it was unlikely.

To make progress, the crypto community would need to put greater pressure on Congress and other government bodies to enforce changes in the current regulatory stance.

And to many people’s surprise, that change might come sooner than expected.

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