Crypto news: SEC could approve Bitcoin ETFs en masse

Today, Wednesday 19 July 2023, applications for spot Bitcoin ETF from BlackRock, Fidelity, Wisdomtree, VanEck, and Invesco will be added to the SEC’s official register. 

According to Bloomberg Intelligence analyst James Seyffart, the SEC could reject or approve all of these applications en masse, although the main assumption remains that it will analyze the individual applications one by one and decide individually whether to approve or reject them. 

It is worth noting that it was not only the giant BlackRock that recently submitted a similar request, because Fidelity, Wisdomtree, VanEck, and Bitwise also submitted similar requests later. 

Thus, it is possible either that the SEC decides to follow a common line for all of these applications or instead decides to analyze them one by one. 

The past

Then again, in the past all similar requests have been rejected, as far back as 2017. 

It is worth mentioning that for the US market, the SEC has already approved ETFs that replicate Bitcoin price movements, but only if they are collateralized in futures contracts on the price of BTC, and not in BTC directly. 

By contrast, all applications for spot Bitcoin ETFs, meaning funds collateralized in BTC, submitted so far have been rejected. 

The difference this time is precisely that it was also BlackRock that submitted one. 

BlackRock is not only the largest asset manager in the world, but more importantly it is also a company that has an SEC approval rate of ETFs very close to 100%. 

Thus it really seems that a distinction should be made between BlackRock’s application and that of other companies, not least because, for instance, VanEck and Bitwise have tried this before with poor results. 

For this reason, according to several analysts, the SEC is unlikely to make a single decision by which it will either reject or approve all these requests en masse, although it is entirely possible. 

In other words, it may well respond in the same way it has responded to similar requests in the past, except with regard to BlackRock. 

Moreover, BlackRock’s request also involves Nasdaq and Coinbase, which are respectively the main US tech exchange and the main institutional-level cryptocurrency custodian and publicly traded company. 

The future

That said, many still anticipate quite a long time before the SEC reaches a decision. 

To be fair, should it want to decide on a rejection similar to those in the past, the decision could also come quickly, in theory. 

However, this time it seems different.

For the SEC, the problem really seems to be the novelty of a similar request submitted by a giant such as BlackRock, which in the past has had almost every ETF for which it applied approved. 

It is precisely because of this that it seems unlikely that the SEC this time will be able to dismiss this one particular application in the same way that it has dismissed all the others in the past, to the point of suggesting that it will take its time to decide. After all, in the past it has always done so in such cases. 

Thus, we can expect several months of waiting, with the final decision most likely not coming before 2024. 

Moreover, precisely in 2024 in the US there will be presidential elections, so this decision could become part of the campaign. In addition, should the election be won by the Republicans, it is possible that the top leadership of the SEC will be changed, as the current chairman Gary Gensler is close to the Democratic Party, and was appointed by Joe Biden a few months after taking office in 2021. 

The consequences of Bitcoin ETF on crypto markets

Although the crypto markets might actually react well to a possible SEC approval of a spot Bitcoin ETF, it is possible that the biggest consequences will only occur in the event that such an ETF is successful. 

It is worth noting that existing ETFs, even if collateralized with futures contracts, are achieving significant success in 2023, especially in the US. 

The thing is that these are derivative financial products that are tradable on traditional exchanges, i.e., where cryptocurrencies are not but where there are plenty of investors and speculators, with capital that greatly exceeds that on the crypto markets. 

Therefore it is not at all impossible to imagine that any BlackRock ETF on BTC could be successful, and in that case the manager of that fund would be forced to buy Bitcoin on the crypto spot markets to put them in reserve as collateral for the fund. 

So while even the mere news of approval could have positive but temporary consequences for the crypto market, any success of these financial products could also have positive consequences in the long run.