Experts Share Insights on SEC’s Bitcoin ETF Delays: Get the Latest Scoop

Late last week the US Securities and Exchange Commission (SEC) delayed seven applications for a Bitcoin Spot ETF. Among the applicants were well-known names like BlackRock, VanEck, and Valkyrie Digital Assets to name a few. However, they all shared the same fate and will now have to wait until at least mid-October for a decision from the regulator.

When asked to comment on the actions of the SEC and its chair Gary Gensler, Anthony Pompliano, Investor and founder of Pomp Investments said on CNBC’s Squawk Box: “I think he’s got an impossible job. If you think about what the regulators have to do is they basically want to encourage innovation. […] At the same time, they want to protect investors.”

Former SEC Chair Jay Clayton, also speaking to CNBC, agreed with Pompliano, stating that many people had developed products in clear violation of securities law. He explained that numerous projects had raised funds without following proper regulatory and disclosure procedures.

If it’s Clear, Why the Delays?

When asked how he would decide if he were the chair of the SEC today, he avoided giving a direct answer, stating that he wouldn’t make statements about who would do what, adding, “It is clear that Bitcoin is not a security. It is clear that Bitcoin is something that retail investors want access to, the institutional investors want access to, and importantly, some of our most trusted providers who are fiduciaries or have duties of best interest want to provide this product to the retail public.”

CNBC’s Melissa Lee was not content with why SEC Chair Gensler was not moving ahead with a Bitcoin ETF despite strong industry support and Bitcoin Future ETFs already trading. She asked:” What is the case to be made when there are, you know, futures ETFs for Bitcoin? That investors are safer buying a Bitcoin futures ETF than a Bitcoin cash ETF?”

According to Clayton, the SEC held the view that the uncertainty and potential for manipulation in the cash trading (spot market) of Bitcoin were reasons to be cautious about allowing retail investors to have access to it through an ETF. He noted that a significant change in the agency’s perception occurred when large institutions entered the market, supported by their enhanced surveillance capabilities. He said: “We can rely on the efficacy of the cash market to a sufficient extent. So, we believe this is an appropriate product. That’s a shift.”

Bitcoin Futures ETFs provide exposure to BTC through future contracts which only predict future price, they do not hold the asset directly. A Spot Bitcoin ETF on the other hand tracks the actual price and usually buys actual Bitcoin.

Grayscale a “Massive Win” for Crypto

Clayton also stated that 45 days is not a long time. 45 days is the time the SEC now has to continue to assess the applications. He mentioned that the court had ordered the SEC to re-evaluate the rejection of another ETF application, the Grayscale decision, as reported earlier by Crypto News Australia.

Digital asset manager Grayscale had sued the SEC after it was denied conversion of its Bitcoin trust into an ETF. Grayscale won the case and the SEC was told by the court to have another look at the application.

Even though this does not mean the SEC must approve the application, it was an important victory for crypto nevertheless. John E. Deaton called it a “massive win”, while the Wall Street Journal called it a blow for Gary Gensler’s ambitions to force regulation on the crypto market.

BTC price had initially reacted positively but has been trading sideways for the past few days. At the time of writing Bitcoin traded for $40,113 (US$25,898) according to CoinMarketCap.