Grayscale's Spot Bitcoin ETF Approval Delayed Again by the SEC

Sunday, 06/02/2022 | 12:10 GMT by Matti Williamson

Pierce believes the SEC may not approve spot ETFs until BTC markets are fully regulated.

Fidelity Investments wish to launch a Metaverse ETF in the US.

The U.S. Securities and Exchange Commission (SEC) is delaying Grayscale's proposed ETF, a spot bitcoin exchange-traded fund. In a statement released on 4 February 2022, the SEC is concerned how Grayscale will fend manipulation and fraud.

Read the official statement

Grayscale is the largest digital asset manager. As of 4 February 2022, the total Assets Under Management (AUM) stand at $36.5 billion GBTC underperformed due BTC heavy selling at the beginning of the year.

Some recovery has been made in the last trading session, Grayscale Bitcoin Trust is up 13.5% (approx.).

source: Grayscale's Twitter

Earlier in 2021, Grayscale asked to convert its GBPTC shares into a spot bitcoin ETF. This is the second time the SEC is delaying their decision to Grayscale's application. The SEC has already rejected several ETF applications from WisdomTree, Krypton, Fidelity and SkyBridge.

In October 2021 the SEC did approve 2 bitcoin future-based funds: ProShares Bitcoin Strategy ETF and Valkyrie Bitcoin Strategy ETF. The SEC to this date has not approved a spot bitcoin ETF.

Fidelity was able to launch its spot bitcoin ETF in Canada, Fidelity Advantage Bitcoin ETF (FBTC). Fidelity has filed a new application in the US, this time for a Fidelity Metaverse ETF.

Read Fidelity Metaverse ETF Application

SEC Crypto Regulations

Some suggest the SEC is rejecting the ETF's due to upcoming regulations in the crypto industry. However, Securities and Exchange Commissioner Hester Peirce said the SEC may not publish new rules for cryptocurrency exchanges this year.

"The expansive definition that's being proposed for exchanges will cover a lot of potential platforms that haven't thought necessarily that they would be covered, and that's in the traditional security space, as well as in the crypto space."

Pierce believes the SEC is unlikely to approve spot ETFs until BTC markets are fully regulated. The SEC's concerns are that crypto markets are yet to be regulated in the same manner as equities.

The SEC may propose to reveal who are the creators of the cryptocurrency, the amount of tokens that will be minted and complete transparency of the code. This will be tied in with anti-fraud rules.