BlackRock’s Bitcoin ETF in Limbo: What’s Behind the SEC’s Latest Delay?

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BlackRock’s Bitcoin ETF in Limbo: What’s Behind the SEC’s Latest Delay?
  • SEC delays ruling on spot Bitcoin ETFs, including BlackRock, Bitwise, VanEck, Fidelity, Valkyrie, Invesco Galaxy, and WisdomTree.
  • Grayscale’s legal victory factors into the SEC’s delay.
  • 45-day extension pushes decision date to October 16-19, but further delays are possible.

The U.S. Securities and Exchange Commission (SEC) has, once again, delayed its ruling on spot market Bitcoin exchange-traded funds (ETFs). Led by Gary Gensler, the Commission opted to postpone a decision on seven spot Bitcoin ETFs, which include BlackRock, Bitwise, VanEck, Fidelity, Valkyrie, Invesco Galaxy, and WisdomTree, citing the need for further evaluation.

As per SEC filings dated August 31, BlackRock, the world’s largest asset manager with over $8.5 trillion in assets, along with six other spot Bitcoin ETF applications, will have to wait another 45 days for a decision – whether it’s approval, denial, or yet another delay. This move disappointed many in the crypto community who were hoping for swift approval.

The cryptocurrency community has been eagerly anticipating the launch of a Bitcoin ETF, viewing it as a significant milestone towards wider acceptance of digital assets. Furthermore, the recent legal victory by Grayscale on August 29, in its lawsuit against the SEC over a denied application for a Bitcoin ETF conversion, was expected to clear the path for the approval of the first spot market Bitcoin ETF.

The delay suggests that the SEC is taking extra time to assess the implications of the Grayscale case. Nevertheless, with BlackRock’s application and Grayscale’s victory, analysts still believe there’s a 75% chance of at least one Bitcoin ETF approval by the end of this year and a 99% chance by 2024.

The race to accumulate Bitcoin has started following BlackRock’s application. This would be the first crypto spot ETF in the United States if approved. However, over the past few years, the SEC has repeatedly postponed decisions.

The primary concerns of the SEC revolve around the lack of transparency in trading data, potential market manipulation, and the unique nature of Bitcoin compared to other assets it typically deals with. The Commission also expresses apprehension about market liquidity.

The initial 45-day review period, initially set to conclude between September 1 and September 4, 2023, has now been extended to end between October 16 and October 19, 2023. This extension is intended to ensure a thorough examination of the proposal and its related issues. However, it’s worth noting that the SEC could opt for another delay, potentially pushing the decision into mid-March of the following year.