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SEC delays BlackRock’s Bitcoin ETF again

The U.S. Securities and Exchange Commission (SEC) has cast a shadow of uncertainty over the fate of a number of exchange-traded funds (ETFs) on Bitcoin, including applications from financial giants such as BlackRock, Invesco, Bitwise and Valkyrie. 

As the SEC grapples with delays and a potential government shutdown, the cryptocurrency market is closely watching for signs of approval or rejection from authorities.

SEC decisions on Blackrock’s Spot Bitcoin ETF hang in the balance between delays and regulatory uncertainty

The U.S. Securities and Exchange Commission (SEC) recently announced a series of delays in its decision-making on the approval of Bitcoin exchange-traded funds (ETFs), a development that has caught the attention of major financial players, including BlackRock, Invesco, Bitwise, and Valkyrie.

Invesco, Bitwise and Valkyrie, along with BlackRock, have all been affected by these delays, as reported in separate documents on Sept. 28. 

In addition, applications from Fidelity, VanEck and WisdomTree are also expected to be delayed, as suggested by Bloomberg ETF analyst James Seyffart. 

These delays come as much as two weeks ahead of the originally scheduled deadline, which had led many applicants to expect a decision from the SEC between Oct. 16 and 19.

The motivation for the delays

The motivation for these unexpected delays appears to be related to the looming threat of a U.S. government shutdown, which could occur on Oct. 1. Such a shutdown could put several federal agencies and financial regulators in crisis in the country. 

The main cause of this impending shutdown lies in the inability of both chambers of Congress – House and Senate – to reach consensus on funding proposals needed to support government operations. 

Congress must pass 12 separate full-year funding bills by the Oct. 1 deadline to avert the crisis.

It should be noted that this is not the first time the SEC has delayed decisions on spot Bitcoin ETFs. A previous group of applicants experienced similar delays in late August, close to the first deadline. 

These recent developments are indicative of the regulatory uncertainties surrounding cryptocurrency investments in the United States.

Decision moved to mid-January: will that be the real date?

Looking ahead, the third set of deadlines for these seven companies is roughly set for mid-January, but even these deadlines could be subject to delay, depending on the evolving political and regulatory landscape. 

Ultimately, the SEC will need to make a final decision by mid-March.

It is worth noting that the probability of an ETF on Bitcoin receiving approval by the end of 2023 has risen to 75 percent, up from the previous estimate of 65 percent, according to Bloomberg ETF analyst Eric Balchunas. 

The main catalyst for this increase in optimism is the U.S. Court of Appeals’ decisive and unanimous ruling in favor of Grayscale in its legal battle against the SEC. This result suggests a favorable shift in regulatory sentiment toward cryptocurrency-based financial products.

Balchunas went further, suggesting that the odds of approval could reach 95 percent by the end of 2024. 

These optimistic forecasts testify to the evolving digital asset landscape and the growing acceptance of cryptocurrency-related financial instruments by traditional financial institutions and regulators.

In conclusion, the SEC’s recent delays in reviewing applications for Bitcoin ETFs submitted by major players such as BlackRock, Invesco, Bitwise, and Valkyrie reflect the regulatory uncertainties surrounding the cryptocurrency industry in the United States. 

These delays are compounded by the potential government shutdown, which adds another layer of uncertainty to the approval timeline. 

Nonetheless, optimism prevails and analysts predict a greater likelihood of approval as regulatory sentiment seems to be shifting in favor of cryptocurrency-based financial products. 

The coming months will no doubt be crucial in determining the fate of these ETF proposals and their impact on the broader cryptocurrency market.