- Lory Kehoe doubts the SEC will approve spot Bitcoin ETF applications this year.
- The SEC opted to delay its decision on pending applications until mid-October.
- The ongoing delays have left Bitcoin and cryptocurrency markets in a state of uncertainty.
The prospect of a spot Bitcoin ETF has been a contention between Bitcoiners and the Securities Exchange Commission (SEC) for over a decade. While Bitcoiners celebrated Grayscale’s recent legal victory, forcing the SEC to review its previous rejection of the company’s application, the industry is still no closer to prevailing in this battle.
In a further blow, former Coinbase Director Lory Kehoe, now founder and Chair of industry network Blockchain Ireland, has dampened what little optimism remained.
Bitcoin ETF Unlikely in 2023
Speaking to Yahoo Finance, Kehoe poured cold water on an imminent ETF approval, saying the SEC “is not afraid to stick to its guns.” Instead, the Blockchain Ireland founder expects the agency to take stock of the situation for the remainder of 2023, leading him to predict that approvals will come next year.
“My take is that it's more likely to happen and be approved in 2024 as more analysis and due diligence takes place over the remainder of this year”, Kehoe said.
The comments contrast Analysts Eric Balchunas and James Seyffart, who raised the odds of a spot Bitcoin ETF approval in 2023 from 65% to 75% at the end of August. Balchunas commented that the Grayscale ruling was unanimous and decisive, giving the SEC “very little wiggle room.”
Since then, Bitcoin has retraced its Grayscale gains, leading to flat market sentiment. Similarly, the SEC opted to defer its decisions on ETF applications from BlackRock, WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise, and Valkyrie until mid-October. Bitwise later withdrew its application.
With that in mind, the odds of a spot Bitcoin ETF approval this year are fast diminishing.
The SEC Holds Steady
A spot Bitcoin ETF would enable the buying and selling of Bitcoin without using a cryptocurrency exchange. This would likely increase market demand and eliminate security concerns, particularly the safe custody of BTC.
Despite years of lobbying from the cryptocurrency industry, the SEC has consistently rejected all spot Bitcoin ETF applications since 2013, fueling suspicions that the regulator harbors an institutional bias against the digital asset sector.
In June 2022, Grayscale sued the SEC for denying its application to convert the Grayscale Bitcoin Trust into a spot ETF. The SEC had justified its decision on the basis that Grayscale’s application failed to meet investor protection standards. However, last month, the US Court of Appeals ordered the SEC to re-review the application, having deemed the rejection “arbitrary and capricious”.
The court ruling initially buoyed market sentiment, sparking a short-lived Bitcoin price rally. Moreover, the ruling also brought hope that the myriad of pending spot Bitcoin ETF applications would now be rubber-stamped. Yet, Bitcoiners continue to wait at the behest of the SEC’s bidding.
On the Flipside
- A Bitcoin spot ETF market would give the SEC greater regulatory control.
- X personality Kyle Chassé pointed out that BlackRock has a 99% ETF approval rate.
Why This Matters
Lingering uncertainty around the SEC’s next move has kept the market subdued, and a decision either way will provide clear direction for the sector.
Read about Bitwise withdrawing its Bitcoin and Ethereum ETF applications here:
Find out more about China’s plans to usher in retail CBDC adoption here: