- Former SEC Chairman has suggested that regulators may find it difficult to resist approving a spot Bitcoin ETF.
- Major players in traditional finance have shown interest in aligning themselves with spot ETF applications.
- BlackRock has resubmitted its application with a finalized surveillance agreement with Coinbase.
The recent application by BlackRock, the world’s largest asset manager, for a spot Bitcoin ETF has generated significant interest in cryptocurrency.
Institutional investors have been pouring funds into the space, hoping to get exposure to Bitcoin through a regulated product. However, the absence of a spot Bitcoin ETF in the United States has been a major regulatory hurdle.
Spot Bitcoin ETF Approval in View?
The primary reason for regulatory hesitation in approving such a product lies in concerns over the potential price manipulation of Bitcoin. However, former SEC Chairman Jay Clayton expressed his belief that regulators would face significant difficulty in resisting the approval of a spot Bitcoin ETF if it functions similarly to a futures ETF.
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Having held a skeptical stance on Bitcoin trading during his tenure as the SEC boss, Clayton now finds it remarkable that prominent players in traditional finance seek to associate themselves with spot ETF applications.
Clayton stated, “If they’re rightโthat the spot market has similar efficacy to the futures marketโit would be hard to resist approving a Bitcoin ETF.” Clayton emphasized that for a spot product application to gain approval, it must demonstrate comparable efficacy to the futures market.
New Proposal Includes Surveillance Agreement
The SEC also insists that applicants must provide clearer explanations of how they would manage a “surveillance-sharing agreement.” This agreement is intended to combat fraud and manipulation by ensuring that the fund issuer actively monitors market trading activity, clearing activity, and customer identity.
BlackRock recently resubmitted its application to the SEC, accompanied by a new proposal with a finalized surveillance agreement with Coinbase, America’s largest cryptocurrency exchange.
On the Flipside
- Even if BlackRock and other major players have shown interest in the product, it is possible that the SEC will not be satisfied that these concerns have been addressed and that a spot ETF will not be approved.
- If a spot ETF is approved, it would be a sign that the SEC has deemed Bitcoin a legitimate investment. This could lead to more traditional investors investing in Bitcoin, increasing the price.
- If a spot ETF is approved, it could lead to increased regulation of the cryptocurrency space. The SEC must ensure that the ETF is properly regulated to protect investors.
Why This Matters
Approving a spot Bitcoin ETF in the United States would be a significant milestone for the cryptocurrency space. It would open the market to institutional investors, who have hesitated to invest in Bitcoin due to the lack of a regulated product.
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