Investors are anticipating the first response in August, and if the answer is favourable, a buying frenzy could start. This means that those who act bravely in bear markets could make massive gains. Of course, the answer is awaited for the Spot Bitcoin ETF. Despite approving the futures ETF, the SEC, which has been rejecting applications for years, insists on rejecting the spot. The former SEC Chairman made some statements on this matter.
Former SEC Chairman on Bitcoin ETF
Former U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton said that applicants for a spot bitcoin exchange-traded fund (ETF), if they can prove it’s a more efficient and effective way for investors to buy the digital asset, have a high chance of approval. Participating in CNBC, Clayton said, “If they’re right that the spot market has similar efficiency to the futures market, it will be hard to resist approving a bitcoin ETF.”
However, Clayton, who led the SEC when previous bitcoin spot ETF applications were denied and now serves as a senior policy advisor at international law firm Sullivan & Cromwell, refrained from predicting when a bitcoin spot ETF might finally happen.
Cryptocurrencies Could Take Off
The SEC has previously rejected applications due to concerns about a lack of transparency and how investors would be protected from the unregulated spot market. Clayton further explained the SEC’s thought by comparing how it had handled the approval of futures ETFs in the past.
“When the SEC approved an ETF based on futures, they said, ‘Let’s look at the futures market, we see oversight, we see that the protections in this market are adequate for the investor. We do not see these in the spot market, so we will make this distinction and reject the spot ETF applications,’” he explained.
This is also the main focus in the lawsuit opened by Grayscale. There is no significant difference in terms of underlying price between the Spot ETF and Futures ETF. Both are indexed to the Bitcoin price, and the SEC’s refusal to approve it makes it seem contradictory to those observing the situation from the outside. If you remember, a few months ago, when we published the Grayscale trial transcripts, the judge also drew attention to this contradiction.
The latest applications by BlackRock and others proposed using Coinbase as a partner for market surveillance and providing information about trading and swapping to increase transparency in the market. The SEC is currently suing a U.S. crypto trading company for allegedly violating U.S. securities laws.
Legislation giving the Commodity Futures Trading Commission more authority to directly regulate the spot market for bitcoin and other potential digital assets, partly because of the collapse of FTX’s and the scandal surrounding Sam Bankman-Fried, stalled last year. However, new legislation could grant similar authority and could reassure regulators when assessing ETF approval. Indeed, the dominant view among politicians is that the CFTC should have supervisory authority over Bitcoin (because it is a commodity).
In conclusion, if the ETF approval comes, this could trigger the start of a significant uptrend for all cryptocurrencies. The former chairman believes that this possibility is not as low as it is thought to be.
