While bitcoin enthusiasts anxiously await the Securities and Exchange Commission’s (SEC) decision on Blackrock’s spot bitcoin ETF proposal, it’s worth delving into the bigger picture.
The following opinion editorial was written by Joseph Collement, General Counsel at Bitcoin.com.
Spot Bitcoin ETF: American Investors Left Waiting as SEC Procrastinates
The rise of cryptocurrency has reverberated globally, presenting a financial revolution that many American investors feel they have been side-stepped from joining. The crypto market’s rapid expansion, coupled with increasing investor interest, has not yet convinced the SEC to approve a spot bitcoin ETF. Simultaneously, other nations have welcomed such ETFs, leading to profitable returns for investors and solidifying their position in this burgeoning market.
Take Canada, for instance. The Purpose Bitcoin ETF (BTCC), approved by the Canadian Securities Administrators in February 2021, yielded over 200% returns in its first year of operation. This outstanding performance placed it amongst the most successful ETFs within the Canadian market. Similarly, the 21Shares bitcoin ETP (ABTC) found favor with the Swiss stock exchange in December 2021, securing strong returns of 162% and outpacing traditional financial instruments in the same timeframe.
The SEC did provide a glimmer of hope in 2021, greenlighting the first “long bitcoin” futures contract ETF (BITO) and its “short bitcoin” counterpart (BITI). However, these options lack the direct access and cost efficiency provided by a spot Bitcoin ETF, forcing investors to grapple with the additional costs and leverage associated with futures contract ETFs.
The SEC’s consistent refusal to allow a spot bitcoin ETF seems contradictory, given that its concerns about market manipulation also apply to traditional markets. Additionally, the absence of a spot bitcoin ETF in the U.S. has pushed retail investors towards unregulated exchanges, increasing their susceptibility to fraud and cybersecurity threats.
So, what are the underlying reasons for the SEC’s denial of a spot bitcoin ETF, beyond the justifications provided in their official refusal notices?
Some speculate that known anti-crypto U.S. law markers may be putting pressure on the SEC to delay a spot bitcoin ETF. After all, an ETF approval would confer a sense of legitimacy to bitcoin (BTC), promoting its image as a mainstream financial asset.
Additionally, the introduction of a spot bitcoin ETF could unintentionally lead Americans towards altcoins, which the SEC categorizes as securities. It could also familiarize them with the concept of self-custody—a notion that, understandably, doesn’t sit well with the government.
Ultimately, the SEC’s hesitant approach towards cryptocurrency begins to resemble the well-known tale of “the boy who cried wolf.” As more countries adopt cryptocurrency and demonstrate its worth as a viable investment opportunity, it’s high time the SEC ceases its procrastination and allows American investors to partake in this financial revolution.
What are your thoughts on the SEC’s reluctance to approve a spot bitcoin ETF in the U.S.? Share your thoughts and opinions about this subject in the comments section below.
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