As the Securities and Exchange Commission (SEC) deliberates on Blackrock’s proposal for a spot bitcoin ETF, the anticipation among bitcoin enthusiasts continues to grow. However, it is crucial to zoom out and consider the larger context.
Spot Bitcoin ETF: American Investors Left in Limbo as SEC Delays
The global impact of cryptocurrency has sparked a financial revolution that many American investors feel excluded from. Despite the rapid growth of the crypto market and the increasing interest from investors, the SEC has yet to approve a spot bitcoin ETF. Meanwhile, other countries have embraced such ETFs, leading to profitable returns for investors and solidifying their position in this burgeoning market.
Let’s take Canada, for example. The Purpose Bitcoin ETF (BTCC), approved by the Canadian Securities Administrators in February 2021, delivered over 200% returns in its first year of operation. This remarkable performance made it one of the most successful ETFs in the Canadian market. Similarly, the 21Shares bitcoin ETP (ABTC) gained favor with the Swiss stock exchange in December 2021, achieving strong returns of 162% and outpacing traditional financial instruments within the same timeframe.
In 2021, the SEC did offer a glimmer of hope by approving the first “long bitcoin” futures contract ETF (BITO) and its “short bitcoin” counterpart (BITI). However, these options lack the direct access and cost efficiency that a spot Bitcoin ETF provides, leaving investors to grapple with additional costs and the leverage associated with futures contract ETFs.
The SEC’s consistent denial of a spot bitcoin ETF appears contradictory when considering that their concerns about market manipulation apply to traditional markets as well. Furthermore, the absence of a spot bitcoin ETF in the United States has pushed retail investors toward unregulated exchanges, increasing their vulnerability to fraud and cybersecurity threats.
So, what could be the underlying reasons behind the SEC’s refusal of a spot bitcoin ETF, beyond the justifications provided in their official statements?
Speculation suggests that anti-crypto sentiment among certain U.S. lawmakers may be pressuring the SEC to delay the approval of a spot bitcoin ETF. After all, such approval would legitimize bitcoin (BTC) and promote its acceptance as a mainstream financial asset.
Additionally, the introduction of a spot bitcoin ETF could inadvertently lead Americans toward altcoins, which the SEC categorizes as securities. It could also familiarize them with the concept of self-custody, a notion that the government may find discomforting.
In the end, the SEC’s hesitant stance on cryptocurrency begins to resemble the well-known tale of “the boy who cried wolf.” As more countries embrace cryptocurrency and demonstrate its viability as an investment opportunity, it is high time for the SEC to put an end to its procrastination and allow American investors to participate in this financial revolution.
Frequently Asked Questions (FAQs) about spot bitcoin ETF
Why has the SEC not approved a spot bitcoin ETF in the U.S.?
The SEC’s reluctance to approve a spot bitcoin ETF in the U.S. is attributed to several factors. One possible reason is the concerns about market manipulation, which also apply to traditional markets. Additionally, there may be pressure from anti-crypto U.S. lawmakers to delay the approval, as it would confer legitimacy to bitcoin as a mainstream financial asset. The introduction of a spot bitcoin ETF could also lead Americans toward altcoins, which the SEC categorizes as securities. Lastly, the concept of self-custody, associated with bitcoin ETFs, may clash with government preferences.
How have other countries benefited from approving bitcoin ETFs?
Other countries, such as Canada and Switzerland, have experienced benefits from approving bitcoin ETFs. For instance, the Purpose Bitcoin ETF (BTCC) in Canada yielded over 200% returns in its first year, becoming one of the most successful ETFs in the Canadian market. The 21Shares bitcoin ETP (ABTC) in Switzerland also achieved strong returns of 162% and outperformed traditional financial instruments. These successful performances have solidified the position of these countries in the cryptocurrency market.
What are the implications of the SEC’s delay on American investors?
The SEC’s delay in approving a spot bitcoin ETF has left American investors on the sidelines of the cryptocurrency revolution. It has restricted their access to direct and cost-efficient investment options, forcing them to rely on futures contract ETFs with additional costs and leverage. The absence of a spot bitcoin ETF has also pushed retail investors towards unregulated exchanges, exposing them to potential fraud and cybersecurity threats. Consequently, American investors are missing out on the potential benefits and opportunities presented by cryptocurrency investments.
More about spot bitcoin ETF
- Securities and Exchange Commission (SEC)
- Purpose Bitcoin ETF (BTCC)
- 21Shares bitcoin ETP (ABTC)
- Canadian Securities Administrators
- Swiss stock exchange