SEC Delays Bitcoin ETF Rulings Until The End Of 2021
Recent filings by the US Securities and Exchange Commission (SEC) reveal that the deadline for a number of Bitcoin ETFs, including one Bitcoin futures ETF, has been extended to November and December 2021.
Although SEC Chairman, Gary Gensler, recently reiterated his support for a Bitcoin futures ETF in a talk hosted by the Financial Times, this only included a narrow class of Bitcoin exchange-traded funds (ETFs) focused exclusively on Bitcoin futures.
Recent filings by the US Securities and Exchange Commission (SEC) reveals the deadline for a number of Bitcoin ETFs, including one Bitcoin futures ETF, that has been extended.
Bitcoin Futures ETFs Are “Inferior Products”
On Sep 29, Gensler noted several open-end mutual funds invested in Bitcoin futures that trade on the Chicago Mercantile Exchange (CME) and register under the Investments Company Act of 1940. He also mentioned that the so-called ‘40 Act provides “significant investor protection” for mutual funds and ETFs.
Gensler then added:
“I look forward to staff’s review of such filings.”
However, the reception to the news has not been entirely positive. Such funds bring an additional layer of complexity since they are hard to manage and are also unlikely to accurately track the spot price of Bitcoin. Mentioning these concerns, Matthew Sigel, head of digital assets research at VanEck, said:
“We see Bitcoin futures-based funds as inferior products that have consistently underperformed the Bitcoin price and bring additional complexities in regards to how they must be managed, at a higher cost than ETFs. Simply put, they are substandard vehicles.”
This attitude could reflect that there is not much demand for Bitcoin futures ETFs at this time. Eric Balchunas, an analyst for Bloomberg, claims a Bitcoin futures mutual fund that launched two months ago has already lost $15 million in assets under management (AUM). In comparison, Canada’s Purpose Bitcoin ETF accumulated over $1 billion in assets in a two-month period after its launch.
SEC Sets Back Bitcoin ETFs
The SEC is currently reviewing over a dozen Bitcoin ETF applications. While the regulatory body has not yet shown the green light to any of the proposals, fund management firms continue to submit applications. Moreover, reports reveal that Fidelity Investments has even urged the SEC to approve its Bitcoin exchange-traded fund in a private meeting.
Nevertheless, the SEC has been reluctant to approve one, delaying decisions on ETFs when the deadline reaches. Now, once again, the regulatory body is extending the deadline for at least four Bitcoin ETFs:
- Valkyrie XBTO Bitcoin Futures Fund: Launched by Valkyrie Investments, their deadline has been extended to December 8.
- Kryptoin Bitcoin ETF: Sponsored and launched by Kryptoin Investment Advisors LLC, the deadline has been extended to December 24.
- Global X Bitcoin Trust: Launched by the New York-based fund manager GlobalX, the deadline for Global X Bitcoin Trust fund has been extended from October 7 to November 21.
- WisdomTree Bitcoin Trust: The deadline for the WisdomTree Bitcoin Trust fund has been extended to December 11.
The good news is that none of the deadlines have been extended to next year. Moreover, considering that December is the deadline for the majority of Bitcoin ETFs, we could see an ETF approved by the end of the year.
What is a Bitcoin ETF?
A Bitcoin ETF enables investors to get exposure to Bitcoin prices without having to actually own the coin itself.
There are several reasons for going to the trouble of investing in a Bitcoin ETF instead of buying BTC directly on a crypto exchange. For one, investors won’t have to worry about the security procedures associated with storing Bitcoin, such as the loss of private keys.
Moreover, investors can invest in a Bitcoin ETF using traditional exchanges and markets. Therefore, there would be no need to deal with crypto exchanges, many of which are stacked with a number of security and user experience concerns.
Further, a crucial advantage of a Bitcoin ETF is that it enables investors to exploit the market in both directions. More precisely, since the ETF is an investment vehicle, investors can long sell if they predict the prices will rise; and can also short sell if they speculate the market will fall.
Do you think the SEC would approve a Bitcoin ETF by the year-end? Let us know in the comments below.