Galaxy Digital today submitted Form S-1 with the U.S. Securities and Exchange Commission (SEC) for consideration of a Bitcoin exchange-traded fund (ETF). The filing is used by companies that plan on going public to register their securities.
— Documenting Bitcoin 📄 (@DocumentingBTC) April 12, 2021
ETFs are financial instruments that track the price movements of Bitcoin. These trade on traditional exchanges, and offer investors a regulated and (relatively) safe exposure to Bitcoin.
And while such products would signal the top-down acceptance of cryptocurrency and help legitimize the space, they have not, so far, been accepted or legally offered in the US.
Is the SEC soon to approve a Bitcoin ETF?
The world of cryptocurrency is potentially high risk for retail investors: Regulatory uncertainty plus the hassle of safe custody can be off-putting for some, especially the less tech-savvy.
Bitcoin ETFs help in such instances. Their advantages include simplifying Bitcoin investing by eliminating custodial obstacles, offering diversification, and eligibility for fairer tax treatment.
However, Bitcoin ETF hopefuls in the US have seen nothing but rejection. Over the years, VanEck, SolidX, Grayscale, ProShares, Direxion, GraniteShares, Bitwise, Wilshire Phoenix, and Realty Shares ETF Trusts have all applied and been rejected by the SEC.
More recently, VanEck re-filed an application, while Grayscale released a statement signaling its intent to convert the Grayscale Bitcoin Trust into an ETF.
Now, with Galaxy Digital joining the hunt, can we expect an imminent change of heart from the SEC?
Todd Rosenbluth, the head of ETF and Mutual Fund Research at CFRA Research, thinks not. According to Rosenbluth, approval could be up to two years away.
“We’ve got a number of firms that have entered and we think we’re likely to see one in the coming year or two, but we don’t have a firm time frame as to when the answer would be yes.”
The world’s first Bitcoin ETF, The Purpose Bitcoin ETF (BTCC), was approved by Canadian regulators in February this year.
Novogratz says crypto is getting too big to ignore
People often say regulators are conflicted as far as endorsing cryptocurrency is concerned. And that hypothesis carries weight based on the SEC’s past actions, including the rejection of several Bitcoin ETF applications.
But that could soon change. Commenting on the flood of institutional investors entering the Bitcoin space, Galaxy Digital CEO Mike Novogratz said that was getting harder to deny Bitcoin’s legitimacy.
“The more people involved in this space, the more big firms, if it’s Tesla, or MicroStrategy, or Goldman, or Morgan Stanley, the more wealthy individuals – the harder it is politically to say ‘hey we don’t like this anymore…’”
With that, and the shoo-in appointment of “crypto-friendly” Gary Gensler as SEC Chair, is mainstream acceptance on the way?
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