Companies have filed to the Securities and Exchange Commission (SEC) for spot-based bitcoin ETFs, after the approval of futures-based bitcoin ETFs.
In contrast to its futures and short cousins, however, the regulatory watchdog does not support spot ETFs. As the SEC rejects an increasing number of spot-based bitcoin ETF applications, concerns have emerged as to whether the market will see one anytime soon.
Rejection of Grayscale and Bitwise Applications
Grayscale and Bitwise’s registrations for Bitcoin-based ETFs on the spot market have stoked speculation over the last month. Grayscale submitted its application for a spot bitcoin ETF last year, with the SEC repeatedly delaying its decision, but the company remained strong in its pursuit of approval. The final verdict was made last week, and it was negative, as predicted by analysts.
Grayscale’s application had been rejected, but it was not the only one. Bitwise has also submitted an application for a spot BTC ETF, which was rejected by the SEC. The latter submitted an application to transform its popular Grayscale Bitcoin Trust (GBTC) into a spot-based ETF. The fund with $12.35 billion in assets is the biggest bitcoin trust and is seeking to advance.
Grayscale had promptly launched a lawsuit against the SEC when its application was denied, arguing that the regulatory agency had no legitimate basis to do so. Michael Sonnenshein, the chief executive officer of Grayscale, bemoaned the SEC’s approval of four futures-based bitcoin ETFs in less than a year.
However, the SEC said that the denial was due to concerns about market manipulations in the bitcoin spot markets, the role that the stablecoin Tether would play in this, and the absence of regulated exchanges and supervision in the bitcoin market as a whole.
Bitwise, on the other hand, has not taken any action in response to the rejection and seems to be taking it in stride.
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