The inevitable has again failed to come to pass: the US SEC has apparently still not relented on its long-standing anti-crypto stance and has yet to approve the first spot Bitcoin ETF in the US.
BREAKING: SEC APPROVES ISHARES BITCOIN SPOT ETF.
— Cointelegraph (@Cointelegraph) October 16, 2023
As per the erroneous reporting by Cointelegraph, the SEC had approved BlackRock's iShares Bitcoin Spot ETF.
On one hand the crypto trades have solid rep of breaking big news, on the other they also have rep of taking words and re-ordering them in a more exciting but not accurate way
— Eric Balchunas (@EricBalchunas) October 16, 2023
However, as noted by Bloomberg's Eric Balchunas, crypto publications have a history of embellishing their breaking news.
— Eleanor Terrett (@EleanorTerrett) October 16, 2023
Fox Business' Eleanor Terret was soon able to confirm that BlackRock's application is still being examined by the SEC and that a formal decision is still pending.
Bear in mind that BlackRock, Grayscale, Bitwise, WisdomTree, Invesco, etc. have applied to the SEC in recent months to launch a spot Bitcoin ETF. While rejecting BlackRock’s spot Bitcoin ETF application in late summer, the SEC went a step further and highlighted the precise lacunae in the investment titan's ETF application, including the absence of a “surveillance-sharing agreement” with eligible spot Bitcoin exchanges. This opened the doors for applicants to remove the highlighted deficiencies and refile their applications. Accordingly, almost all aspirants then refiled their applications.
Moreover, Grayscale recently won a favorable ruling in its lawsuit against the SEC's reluctance to allow the conversion of its Bitcoin Trust to a spot ETF, with the court finding grounds to conclude that the SEC acted in an arbitrary and capricious manner.
Bear in mind that a spot Bitcoin ETF makes it extremely convenient for investors to acquire exposure to Bitcoin without the pitfalls associated with futures-based ETFs, which include roll-over losses in futures contracts that are typically in contango - a common situation where contracts for the months ahead are usually priced at a premium to the spot price, leading to expensive roll-overs as the front-month contract expires and the next one takes its place. Over time, should contango persist, this practice leads to higher costs and ETF underperformance relative to the spot price. Due to this phenomenon, the futures-based Bitcoin investment avenues are not conducive to large-scale institutional adoption.
On the bright side, the drama was good enough for a brief pump-and-dump exercise.
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