Latest Deadline in Bitcoin-ETF Race Looms

The latest deadline in the race for a Bitcoin ETF approval is just around the corner, and many market-watchers expect fans to be disappointed if regulators punt on making a decision.

(Bloomberg) — The latest deadline in the race for a Bitcoin ETF approval is just around the corner, and many market-watchers expect fans to be disappointed if regulators punt on making a decision.

The US Securities and Exchange Commission is set to make a ruling on the ARK 21Shares Bitcoin ETF application by Sunday, Aug. 13, according to a tally kept by Bloomberg Intelligence, the latest in what could end up being a string of resolutions given the slew of other applicants trying for such a product.

An ETF that invests directly in Bitcoin hasn’t been authorized in the US, though recent hype around the potential approval of one has whipped the industry into a frenzy. 

Still, even if a green-light could come later on, many don’t expect a decision just yet. Cathie Wood, the founder of ARK, herself said that the SEC may bless multiple spot-Bitcoin ETFs at the same time, reversing an earlier view that her firm would be first in line to get approval.

“In our view, the odds of an ARK/21Shares Bitcoin ETF approval this week are very low. We are fully expecting a delay decision from the SEC on Friday,” said Bloomberg Intelligence ETF analyst James Seyffart. “The market and most people are not expecting anything crazy. I believe it’s consensus opinion that this will be delayed. It’s just the norm and nothing has happened that indicates they would break from the norms.”

A number of issuers have filed applications for spot-Bitcoin ETFs, which, if launched, would be the first of its kind in the US. The SEC has rejected all former such attempts. But excitement around the potential for it has in the past — as it has now — helped push crypto prices higher. Bitcoin rallied in June when BlackRock Inc. kicked the race into high gear with its application, though prices have been more subdued since then. The coin is currently trading around $29,400, a level it’s been hovering at for weeks, though it briefly climbed above $31,000 at one point. Bitcoin traded at a record high of almost $69,000 in late 2021.

Read more: Why Crypto Is Counting on Spot Bitcoin ETFs: QuickTake

21Shares had submitted paperwork for a spot fund in April. K33’s Bendik Schei and Vetle Lunde agree that “a postponement remains the most plausible outcome,” in the 21Shares decision. The pair added that past cases suggest the SEC will delay making a decision. 

Though the SEC has rejected prior attempts, some see this time as being different given BlackRock’s role in the fight to get one green-lit. The fresh effort has emboldened a number of issuers to also file for Ether-futures-based funds — as well as pushed some to try for a Bitcoin-Ether-futures hybrid — something that also doesn’t yet trade in the US. 

Roxanna Islam, associate director of research and head of sector and industry research at VettaFi, says that looking at the Grayscale Bitcoin Trust (GBTC) could be a good proxy for what the market is expecting on the spot-fund decision front. Grayscale has sued the SEC for rejecting its ETF conversion application.

“We’ve already seen a slowdown in the narrowing of GBTC’s discount as a sign that the market is not expecting an immediate approval in spot Bitcoin ETFs,” she said, referring to its discount to its underlying holdings, which is currently hovering around 25%. “I think the earliest a spot Bitcoin ETF could be approved is closer to the end of the year after the SEC makes a decision on Grayscale’s case, which could then set off a chain of approvals across other spot ETF filings.”

–With assistance from Katie Greifeld.

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