Key Takeaways:
- The Securities and Exchange Commission (SEC) is yet to approve a Spot Bitcoin ETF
- Several firms, including BlackRock and Fidelity, are competing to launch the first Spot BTC ETF
- Analysts believe Gary Gensler will soon be forced to agree to a Bitcoin Spot ETF
YEREVAN (CoinChapter.com) — Several companies are currently competing for the first spot Bitcoin (BTC) exchange-traded fund (ETF) in the United States. These firms include investment giants BlackRock and Fidelity. The duo has recently listed crypto exchange Coinbase (COIN) as a partner for market surveillance sharing. However, with Gary Gensler still hostile against the crypto industry, traders now wonder if the US Securities and Exchange Commission (SEC) will approve a BTC ETF.
Interestingly, their partnership with Coinbase comes even though the exchange currently faces charges from the SEC for allegedly operating as an unregistered exchange, broker, and clearing agency.
The SEC, not a big fan of Coinbase facilitating a spot Bitcoin ETF
In a recent press briefing, SEC Chairman Gensler clarified that the US Financial regulators are concerned about the operation of cryptocurrency exchanges. As a result, the partnership of financial giants with Coinbase for a spot Bitcoin ETF is not to their liking.
Gensler expressed worry about crypto exchanges offering a variety of conflicting services. This, according to him, was one of the reasons behind the enforcement action taken against Coinbase.
Gensler explained that this concern arises from the possibility of crypto exchanges trading directly against their customers and engaging in market-making practices that remain hidden. These practices are not commonly observed on traditional stock exchanges such as the New York Stock Exchange or NASDAQ.
“What that means is they could be trading directly against you and market making against you which you would not see, or hope to see on the New York Stock Exchange or NASDAQ,”
The Block quoted Gensler saying.
Gensler also argued that crypto platforms have inadequate risk monitoring systems in place. Hence, they cannot be trusted to detect wash trading, a form of market manipulation.
As a result, The SEC has consistently rejected numerous applications for spot Bitcoin ETFs, even predating Gensler’s tenure.
Is the SEC using Spot Bitcoin ETF to make Coinbase comply?
According to James Seyffart, an analyst covering ETFs at Bloomberg, the SEC is preparing the groundwork to deny the spot Bitcoin ETF applications.
“Gary seemingly pouring some cold water on the Coinbase SSA potential for spot Bitcoin ETF approval…To us, this is a sign that he might be laying groundwork for potential denial reasonings. Some more goalpost moving maybe…”
he wrote on Twitter.
However, his colleague, senior ETF analyst Eric Balchunas thinks otherwise. According to him, Nasdaq and BlackRock know Gensler has a problem with crypto exchanges. Hence, they may be working with Coinbase to address all these problems to get approval from the SEC.
This could mean that the Federal agency is using ETF approval as leverage to make sure exchanges comply in exchange for an ETF approval.
The SEC will approve a Spot BTC ETF
Meanwhile, some users believe that the financial organizations vying for a Spot Bitcoin ETF are too big for the Securities and Exchange Commission to deny.
“If you really think BlackRock is going to let Gary Gensler embarrass them by rejecting their bitcoin ETF you have no idea about about who holds real power in the world and how things really work. This is a done deal. The ETF will be approved,”
one Bitcoin investor argued.
Moreover, Jay Clayton, former Chairman of the SEC, has also argued it won’t be long before a BTC Spot ETF is approved.
“If you can demonstrate that the spot market has similar efficacy to the futures market, it would be hard to resist approving a Bitcoin ETF,”
he told on CNBC’s SquawkBox earlier this week.
Meanwhile, Gary Gensler is still holding firm on his anti-crypto stance. Will the pressure from BlackRock force the SEC to cave in? Time will show.
