Spot Bitcoin ETF Approval “Fairly High”
According to Bernstein, a renowned $650 billion asset manager, the chance of a spot Bitcoin ETF gaining approval is quite high. This comes after the Securities and Exchange Commission’s (SEC) continuous denial of proposals for a spot ETF, despite approving futures ETFs. However, Bernstein believes that the SEC’s argument against spot ETFs is unlikely to hold up in the Grayscale vs SEC case.
The analysts at Bernstein argue that the SEC is more inclined to approve a spot Bitcoin ETF offered by a regulated Wall Street giant rather than dealing with products such as the Grayscale Bitcoin Trust (GBTC). These claims are backed by the fact that major asset managers like BlackRock, Fidelity, and Invesco have recently expressed interest in entering the cryptocurrency market.
One of the SEC’s main contentions against spot ETFs is that futures pricing is derived from regulated exchanges such as the CME, while spot prices come from crypto exchanges like Coinbase. However, Bernstein believes that with asset managers increasingly adopting market surveillance agreements to address concerns over manipulation, the SEC’s argument is losing ground.
The ongoing Grayscale vs SEC case, which is centered around the regulator’s disapproval of converting GBTC into a spot Bitcoin ETF, further supports the likelihood of approval for a spot ETF. Bernstein analysts suggest that the court hearing the case is unlikely to be convinced “that the futures price is not derived from the spot price.” They also argue that approving futures ETFs while denying spot ones would be a difficult position for the court to justify.
The analysts summarize their outlook, stating that the SEC would prefer to have a regulated bitcoin ETF led by mainstream Wall Street participants with surveillance from existing regulated exchanges. This would be preferable to dealing with a Grayscale OTC product, which currently fills the institutional gap in the market.
Recent developments, such as the SEC’s quick feedback on filed proposals and the inclusion of Coinbase as the exchange for market surveillance sharing agreements, indicate a positive trajectory towards spot ETF approval. Nasdaq has also refiled BlackRock’s ETF proposal, explicitly naming Coinbase as the crypto exchange involved.
In conclusion, the chances of a spot Bitcoin ETF gaining approval by the SEC are deemed “fairly high” by Bernstein. The increasing interest from mainstream Wall Street giants, the ongoing Grayscale vs SEC case, and the adoption of market surveillance agreements all contribute to a positive outlook for a spot ETF approval.
