The Battle Between the SEC and Crypto Industry Over a Bitcoin ETF

The Battle Between the SEC and Crypto Industry Over a Bitcoin ETF

The Securities and Exchange Commission (SEC) has been facing a battle with the crypto industry over the approval of a Bitcoin exchange-traded fund (ETF). While a U.S. circuit court in Washington D.C. recently ordered the SEC to revisit its rejection of a Bitcoin ETF application by Grayscale, the outcome is still uncertain. This article will delve into the potential impact of a Bitcoin ETF approval or rejection on the price of Bitcoin and the crypto market as a whole.

Many investors and insiders within the crypto industry anticipate a surge in the price of Bitcoin and other crypto assets if the SEC approves a Bitcoin ETF. DeCryptoFi founder and CEO Nicholas Scherling expressed confidence in a quick pump in prices upon approval. However, news of any rejections by the SEC could lead to a rout in the price of Bitcoin. Nate Geraci, president of ETF Store, even warned of a potential “rug pull” in crypto history if the SEC fails to approve a Bitcoin ETF in January.

The SEC has not made it easy for institutional financiers who wish to launch a Bitcoin ETF. The regulatory body has rejected “in-kind” structured ETFs and has instead insisted on “cash create” ETFs. This insistence on a specific form of ETF creation could result in increased tax liabilities for issuers and potentially higher fees for clients. These obstacles have created a battle between funds and regulators, which might further delay the approval of a Bitcoin ETF beyond January.

Eric Balchunas, a senior Bloomberg ETF analyst, pointed out that the average fee for ETF trading is 0.01%. He humorously suggested that a Bitcoin ETF would unleash the power of one basis point and Nate Geraci responded by emphasizing the potential bloodbath that crypto exchanges could face. In contrast, popular crypto exchanges like Coinbase can have trading fees as high as 0.6%. Balchunas believes that a Bitcoin ETF could eliminate these high trading fees, which would be financially beneficial for investors.

The battle between the SEC and the crypto industry over a Bitcoin ETF continues to unfold. While the recent circuit court order for the SEC to reconsider Grayscale’s application provides a glimmer of hope, the outcome remains uncertain. The approval or rejection of a Bitcoin ETF by the SEC has the potential to significantly impact the price of Bitcoin and the entire crypto market. Investors will continue to watch closely as this battle plays out, assessing the implications for their investment strategies.


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