SEC Delays BlackRock’s Bitcoin ETF – What’s Next for Crypto?

By Kevin • September 2, 2023 11:00 pm • Comments

The U.S. Securities and Exchange Commission (SEC) has announced a delay in its decision regarding spot Bitcoin exchange-traded fund (ETF) applications, affecting several applicants, including BlackRock, WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise, and Valkyrie Digital Assets.

The decision comes amidst a significant increase in Bitcoin’s price, which has surged by over 50% this year.

The SEC’s decision to postpone these applications follows an earlier Washington court ruling that overturned the SEC’s denial of Grayscale’s application to convert the Grayscale Bitcoin Trust into an ETF.

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This ruling has prompted expectations that the SEC may delay other applications and possibly appeal the court’s decision.

Watcher.guru reports:

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein,” documents say in response to the BlackRock proposal.

The SEC has yet to allow any Spot Bitcoin ETF to come to market. The filings say it would delay its ruling on the proposals by at least another 45 days.

In addition to the four applications delayed today, the SEC has until September 1 to address an application by Bitwise. The regulator will also need to decide on filings from BlackRock, VanEck, and Fidelity soon.

The SEC’s decision to delay BlackRock’s Spot Bitcoin ETF comes the same week that Bitcoin has shot up in price. The leading cryptocurrency is up over 50% this year.

The SEC filings indicate that the agency would extend the deadline for reviewing the applications by at least another 45 days.

These extensions mean that Wise Origin, Galaxy, and WisdomTree have new deadlines for their applications on October 17, while Valkyrie’s deadline is two days later on October 19. Bitwise faces an October 16 deadline.

The SEC typically uses the entire 240-day review period before making a final decision, as seen in these extensions. This practice has become somewhat expected within the industry.

The delay of BlackRock’s Spot Bitcoin ETF application is notable because BlackRock is one of the world’s largest asset management firms.

These ETFs aim to provide easier access to Bitcoin for retail investors without the need for setting up digital wallets or purchasing Bitcoin directly.

CoinDesk reports:

Already down sharply on the day, bitcoin (BTC) fell further on the news, now off 4.1% over the past 24 hours to $26,100.

The SEC began reviewing the latest slate of applications, from both crypto-heavy and traditional finance firms like Wise Origin (Fidelity), BlackRock and Invesco Galaxy, last month.

The applicants hope to launch the first spot bitcoin ETF, which advocates have argued would allow for greater retail investment in the bitcoin space while saving investors from the troubles of setting up a wallet or having to buy bitcoin directly.

The recent ruling by the D.C. Circuit Court of Appeals found the SEC’s previous arguments against Bitcoin ETF applications to be “arbitrary and capricious.”

The court pointed out that the SEC had approved Bitcoin futures ETFs while denying spot Bitcoin ETFs, even though the two types of products were closely correlated.

Judge Neomi Rao emphasized that both the underlying assets (Bitcoin and Bitcoin futures) and the surveillance sharing agreements with the Chicago Mercantile Exchange (CME) were similar, and there was a high likelihood of detecting fraudulent or manipulative conduct in both markets.

In light of this ruling, the SEC is expected to reconsider its stance on Bitcoin ETFs.

The delay in decisions for multiple applications, including BlackRock’s, underscores the ongoing regulatory uncertainty surrounding cryptocurrency-related financial products in the United States.

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