The Latest on the Fight Over a US Bitcoin Spot ETF
J.W. Verret
The SEC has approved a few Bitcoin Futures ETFs. They’re clunky and they have huge intermediary fees. A Bitcoin spot ETF would do a much better job of giving retail investors exposure without having to go through wallets or individual exchanges. I’m sure all the major retail brokerages would love to offer the product. Despite both Canada and Europe approving Bitcoin spot ETFs, the US SEC still drags their heels.
Why? The SEC says it wants to make certain that the underlying markets can’t ever be subject to manipulation. That side of the argument articulated here. Will the spot prices converge as quickly for Bitcoin trades as securities in the NMS system? No.
Is the SEC holding a bitcoin spot ETF to the same standard as prior ETF applications? No, it is holding these applications to a ridiculously higher standard. At this point the regulatory resistance is more a function of political calculus than regulatory due process. Which may lead to legal challenge, the folks at Davis Polk make a good argument that the bitcoin spot ETF application is being ill treated relative to the Bitcoin Futures ETF, this memo would make a pretty good legal filing…