Bloomberg Exchange Traded Fund (EFT) analysts Eric Balchunas and James Seyffarth said a proposed rule change with the United States Securities and Exchange Commission (SEC) could be the catalyst for the regulatory body to approve a Bitcoin ETF. spot in mid-2023.
Balchunas said in a tweet on Thursday that crypto platforms could fall under the SEC’s regulatory framework if the committee approves an amendment to revise the definition of “exchange” proposed in January. The rule change would amend the Exchange Law to include platforms “that can be used to trade securities of any kind,” apparently including cryptocurrencies, making their investment instruments more popular with regulators.
New note out on why we think spot bitcoin ETFs will get approved in early Summer 2023. The SEC is proposing to expand the definition of “exchange” which would bring crypto platforms under SEC reg. After that (which could take a year) look for ETFs to get green light via @JSeyff pic.twitter.com/TtFgFXrJ8h
– Eric Balchunas (@EricBalchunas) March 24, 2022
Once cryptocurrency exchanges become compliant, the SEC’s primary reason for denying Bitcoin Spot ETFs would no longer be valid, likely clearing the way for approval.
The SEC could approve spot cryptocurrency ETFs, including exchanges exposed to Bitcoin (BTC), under a revised definition of “exchange,” which could be finalized between November 2022 and May 2023, according to Balchunas and Seiffart. Although some bitcoin futures-related investment vehicles were approved in 2021, regulators have so far rejected all rule changes that would allow spot BTC ETFs to be listed on exchanges.
Many US lawmakers and industry leaders have objected to the SEC’s apparent reluctance to approve a spot Bitcoin ETF. In November, House members Tom Emmer and Darren Soto sent a letter to SEC Chairman Gary Gensler questioning the regulator’s refusal to list a bitcoin ETF. Bitfury CEO and former acting Comptroller of the Currency Brian Brooks also said at a hearing in December that the United States is “certainly” behind in approving crypto-ETFs.
Earlier, Ric Edelman, founder of advisory firm Edelman Financial Engines, said he believes the SEC will approve a bitcoin ETF launch within the next two years as the cryptocurrency market matures.
Hopefully, it will happen, if not in the next twelve months, then in 2023. The fact is, the SEC is running out of excuses to say no.
He explained that the maturity of the cryptocurrency market and its rapid development should clear the regulator’s doubts about approving applications to launch Bitcoin ETFs. SEC Chairman Gary Gensler motivated the agency’s position by the fact that it will not be able to sufficiently control this investment product. But in that case, the SEC cannot fully control gold and oil, Edelman said.
The founder of Edelman Financial Engines added that investors who are curious about cryptocurrency ETFs and cannot access them within the US go to other countries where they are allowed. What’s worse, people are forced to use unregulated platforms, risking losing money.
Edelman cited this as a good reason why the SEC should approve bitcoin ETFs, which would be a step toward protecting consumer rights. He said that around a quarter of Americans now own BTC and given its growing popularity, a third of US citizens will own it by the end of the year.
“There are a lot of people who invest in bitcoin, they just don’t advertise their investments. You can compare them to teenagers buying beer,” Edelman joked. Bitwise chief investment officer Matthew Hougan agreed with Edelman that efforts by industry players to address SEC concerns about crypto this year could “pay off.”
Indeed, crypto companies have expressed a willingness to work with regulators and help develop rules to oversee digital assets. Hogan believes that the cryptocurrency market has matured, so it is time to overcome the SEC’s resistance to launching cryptocurrency ETFs. Previously, Hogan said that bitcoin futures ETFs are not suitable for long-term investors due to additional costs.