There’s perhaps no single offering in the crypto space investors are anticipating more fervently than a Bitcoin (BTC-USD) spot exchange-traded fund (ETF). With the massive price potential of Bitcoin, many investors are looking for a spot ETF that can net them similar gains without the downsides. Unfortunately, the government has been making access to such a fund quite difficult. However, it seems now that investment firms are confident that a green light for these ETFs could be coming soon.
Crypto spot ETFs are a much-desired product for several reasons. Many investors are in awe of Bitcoin’s price potential; the coin is one of the only investments that can climb thousands of dollars in just a few days. As such, these investors want to add it to their portfolios. But, when one buys Bitcoin, they are subject to the value plummets just as often. An ETF allows one to put a shield between themselves and the volatility by not directly owning it.
But more importantly in the grand scheme of the industry is just how accessible investing in crypto can become through ETFs. One needn’t create a wallet, link it to an exchange, load fiat and learn how to trade. Rather, they can simply buy some ETF shares through their brokerage of choice. This ease of use would do well to get many more people into the industry.
But with all of these positives, the volatility of the crypto industry at large has made the Securities and Exchange Commission (SEC) very reluctant to approve a spot ETF. All Bitcoin ETFs on the market now are futures ETFs; while regulators worry about wild fluctuations of spot funds, futures funds do not correlate directly to Bitcoin prices. Spot ETFs, while potentially more lucrative, have yet to see any approval.
A Bitcoin Spot ETF Could Be Coming Soon
For years now, crypto investing firms have been trying to no avail to approval for a Bitcoin spot ETF. But, futures ETF approvals last year got the ball rolling and, now, investment firms are getting confident that the spot ETF will be coming very soon.
At a panel event at Consensus 2022, some of the biggest crypto investing firms in the world came together to talk about the future of the Bitcoin spot ETF. And as executives from both Grayscale and Bitwise are saying, recent SEC behavior points to incoming approval.
Previously, Bitcoin spot ETFs have been filed under the 1940 Investment Act, while futures ETFs have been filed under the 1933 Investment Act. Of course, the SEC has been approving the futures ETFs, but not the spot ETFs. But, as these executives point out, recent successful futures ETFs were filed under the 1940 Investment Act. As Bitwise Chief Investment Officer Matt Hougan puts it: “That’s a progression that ends in a spot bitcoin ETF.”
Grayscale ETF lead David LaValle agreed with this take, and points to a major catalyst for this conversation coming in July. That’s because the SEC has until July 6 to approve or deny Grayscale’s long-sought after Bitcoin spot ETF. He says if Grayscale sees disapproval once again, he says the company will be “addressing all options.”
It’s likely LaValle is referencing a lawsuit that Grayscale is allegedly preparing in case its application is denied. Indeed, the company is building up a robust legal team in recent weeks, hiring former U.S. Solicitor General Don Verrilli as legal counsel. Experts believe that the SEC is likely to approve of the spot ETF next month, but now it is certainly expected, with these experts contending that the SEC would be unable to win such a lawsuit.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.