• The SEC is likely to avail the entire 240 days of the review process before approving any of the spot Bitcoin ETF applications.
• The federal regulator has been reluctant of approving this investment vehicle citing market manipulation risks.

The crypto community has been eagerly waiting for the SEC’s approval for spot Bitcoin ETF, however, it could be early 2024 when the investment vehicle finally sees the light of the day. In June, BlackRock, the world’s largest asset management firm, submitted its application for a Bitcoin ETF to the SEC, joining the list of ETF filings currently under review.

This move sparked renewed interest among investors both within and outside the cryptocurrency space. To potentially enhance its application’s prospects, BlackRock also established a “surveillance-sharing agreement” with Coinbase, considering reports suggesting that the SEC might consider ETF applications with such arrangements.

BlackRock is just one of the many companies seeking approval for a crypto ETF from the SEC. ARK Invest, led by CEO Cathie Wood, filed for its ARK 21Shares spot Bitcoin ETF in May 2023. However, the SEC recently extended its review period by 21 days to allow public input on the proposal.

As per the SEC’s guidelines, the securities regulator has the authority to delay ETF applications by as long as 240 days. Note that the SEC has yet to approve the first spot Bitcoin ETF in the United States. Prominent asset management companies seeking approval for spot Bitcoin ETFs from the SEC include BlackRock, ARK Invest, Bitwise Asset Management, VanEck, WisdomTree, Invesco, Galaxy Digital, Fidelity, and Valkyrie.

As said, the SEC has the option to extend its review process by up to 240 days. This means that ARK’s Bitcoin ETF application could see its final deadline as January 2024, while the decisions for other companies’ proposals might be reached as late as March 2024.

Why the US SEC Is Reluctant on Approving A Spot Bitcoin ETF?

Gaining approval from the SEC for a spot crypto ETF faces a hurdle due to the unique nature of the investment vehicle. Unlike Bitcoin futures-linked ETFs, which allow investing in the crypto asset without owning it directly, a spot BTC ETF involves holding actual Bitcoin within a fund for more direct investment.

Meanwhile, the SEC is currently engaged in enforcement actions against Coinbase, Binance, and Ripple. The regulatory body has also imposed financial penalties on firms like Bittrex. Stuart Barton, co-founder and chief investment officer of Volatility Shares told Cointelegraph:

“Both sides are going to bend a little bit. I think the SEC are going to have to be a little bit more open-minded […] There’s going to be a lot more bending, I think, from the crypto side.”

By August, some analysts have indicated that the likelihood of a spot Bitcoin ETF receiving approval in the United States stands at around 65%, partly influenced by BlackRock’s application. Cathie Wood and Grayscale, the asset manager in a lawsuit against the SEC regarding its ETF application, have suggested that the regulator might consider approving multiple applications concurrently to prevent any single company from gaining an advantage over others.