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07.04.2022 01:53 PM
Bitcoin: SEC's argument against spot ETF 'significantly weakened'

Last year, the U.S. SEC approved a Bitcoin futures ETF for the first time. Then this event became a catalyst for the growth of the main cryptocurrency to an all-time high of almost $70,000.

After that, they began to talk that the next step would be the SEC's approval of the Bitcoin spot ETF. Time goes by, how are things in this direction?

SEC's Stance Against Spot ETF Weakens

The Grayscale Fund does not give up trying to be one of the first to register an ETF for spot Bitcoin. But so far they have not been able to get approval. Nevertheless, CEO Michael Sonnenshein said that the SEC's argument against an exchange-traded fund that will directly track Bitcoins has "significantly weakened."

Sonnenshein cited the recent regulatory approval of a Bitcoin futures ETF as a key factor behind his reasoning.

The U.S. Securities and Exchange Commission on Wednesday allowed NYSE fund managers Arca and Teucrium to launch a bitcoin futures ETF. This is the fourth approved fund after Grayscale, VanEck, and Valkyrie.

However, the regulator has repeatedly rejected proposals for a spot Bitcoin ETF, citing concerns about investor protection and uncertainty about the classification of cryptocurrencies.

Grayscale is ready to sue the SEC

In a series of tweets, Sonnenshein noted the controversy in the recent SEC approval of the Teucrium ETF. In his opinion, it weakens the argument against the spot ETF.

The regulator has repeatedly invoked investor protection mandates from the 1940 law to reject applications for a spot ETF. But it is known that Teucrium ETF is registered under another bill from 1933.

This indicates that the SEC's reference to the 1940 act may be less valid. Sonnenshein noted that Grayscale will now follow this line of reasoning in its bid for a Bitcoin Spot ETF.

Earlier, Grayscale CEO argued that if the SEC approves a bitcoin futures ETF, then the Commission should also approve a bitcoin spot ETF. And they can no longer reasonably invoke the 1940 Act as a limiting factor.

Grayscale has also threatened to sue the SEC if its next offer to register a Bitcoin spot ETF is rejected. The fund has repeatedly lobbied for approval of its spot ETF, even providing public comments on its application, which is currently under review.

Can we expect spot ETFs in the U.S. in 2022?

Canada and Europe have already allowed trading in products that directly track digital assets. These derivatives have proven to be vital in attracting institutional capital into cryptocurrencies.

The SEC has yet to soften its rhetoric on cryptocurrencies and a direct public ETF. But with the growing adoption of this asset class and friendly federal regulation, the regulator may eventually change its tone.

President Joe Biden's executive order last month was hailed as a major step forward in regulating the crypto industry in the U.S. Additionally, U.S. federal agencies will now cooperate in enacting "constructive" regulation of cryptocurrencies.

Thus, there are hopes for the approval of spot ETFs, but it is still difficult to predict the timing. However, the expectation factor alone, as we saw it in 2021, can push the cryptocurrency market higher. Nevertheless, now the information field for this is still weak.

But the very fact of creating ETFs on spot Bitcoin will open the way for institutional capital to the market, creating demand for the main cryptocurrency and pushing its price up.

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