Struggle for Spot Bitcoin ETF Approval: Potential Impact on Crypto Market
The SEC has previously rejected around 30 spot Bitcoin ETF applications, mainly due to concerns about the potential for market manipulation. Continue reading this article to know more about the struggle for spot bitcoin ETF approval.
7 JUL 2023, 3 min read
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In a promising move to boost the crypto market, BlackRock Inc., the world's largest asset manager, has resubmitted an updated application for its proposed Bitcoin exchange-traded fund (ETF).

This submission, made via Nasdaq to the US Securities and Exchange Commission (SEC), specifies Coinbase Global Inc. as the market surveillance partner for the proposed ETF.

Role of Coinbase in Regulatory Compliance

The revised application comes after the SEC flagged initial filings by issuers as insufficient and lacking in the necessary information.

BlackRock’s initial filing on June 15 did not specify the surveillance-sharing partner, an essential requirement under the SEC's ETF regulatory framework.

This move represents BlackRock's strategic response to this feedback and highlights the company's commitment to adhering to regulatory standards.

This development isn't exclusive to BlackRock. Other prominent companies, including Fidelity Investments, Invesco, and VanEck, have updated their applications, naming Coinbase as their partner for surveillance-sharing agreements.

The collaboration with Coinbase, representing over 50% of Bitcoin trading on US platforms year-to-date, might help alleviate the SEC's concerns regarding fraud and market manipulation in the crypto space.

Struggle for Spot Bitcoin ETF Approval

The SEC has previously rejected around 30 spot Bitcoin ETF applications, mainly due to concerns about the potential for market manipulation.

However, the agency recently permitted ETFs based on Bitcoin futures in 2021 and a leveraged Bitcoin futures fund. These decisions indicate a potential shift in the regulatory landscape.

BlackRock’s refiling and choice of Coinbase as the market surveillance partner may be the key to securing approval for a spot Bitcoin ETF.

This could mark a significant turnaround from the SEC’s previous stance and pave the way for greater acceptance of such funds.

Market analysts believe that effective crypto market surveillance could address the SEC's concerns and be instrumental in securing approval for a spot Bitcoin ETF.

Market Implications and Economic Events

The broader crypto market, especially Bitcoin, has seen a substantial rally. Bitcoin's performance has been particularly noteworthy, with an over 23% surge in the past three weeks as it poked above the $31,000 level for the second time in 2023.

A potential support zone (a level from which price can bounce back) for Bitcoin lies between $27K-$29K. Should Bitcoin hover below this price range, it might lead to a more profound decline in the value of altcoins.

Nonetheless, the recent developments suggest a rather optimistic outlook for the crypto market. While the crypto world awaits the SEC's decision, there is hope that the regulator's acceptance of ETFs based on Bitcoin futures might signal a warmer reception for spot Bitcoin ETFs.

The potential impact on the crypto market is immense, offering the promise of broader accessibility for everyday investors.

Potential Impact on the Crypto Market and the Regulatory Landscape

Several significant economic events may influence the Bitcoin ETF saga in the coming week. The June FOMC minutes due on Wednesday could provide greater insight into the Federal Reserve's upcoming moves on interest rates.

Additionally, the new unemployment numbers on Friday could impact market sentiment. All these factors will be balanced against the unfolding news on the SEC's next steps regarding Bitcoin ETFs.

With crypto reaching a wider audience and major companies like BlackRock showing increasing interest, Bitcoin's rise in popularity is tangible.

Nevertheless, it will be essential to see how the regulatory landscape evolves in response to these market dynamics.

As regulatory clarity improves with each proposed Bitcoin ETF, there are likely trends to anticipate in the crypto market.

First, approving a spot Bitcoin ETF could stimulate institutional investments, facilitating a more substantial flow of capital into the crypto market.

This increased inflow of funds might lead to a surge in Bitcoin's price, positively influencing the wider crypto market.

Furthermore, such developments can pave the way for more crypto-related products. With the likes of BlackRock showing interest, other traditional finance giants might be incentivized to integrate crypto-based financial instruments, reaffirming the legitimacy of the crypto market.

It's worth considering the global influence as well. The US SEC’s decision might set a precedent for regulatory bodies in other countries.

If the world's largest economy allows spot Bitcoin ETFs, other nations might follow suit, fostering a more accommodating international regulatory environment for cryptos.

The role of crypto market surveillance cannot be overstated here. Robust surveillance mechanisms deter fraudulent activities and ensure transparency and fair play.

As more companies adopt such measures, the crypto market might become more reliable and safer, attracting more diverse investors.

However, it's crucial to note that these are potential trends based on the current scenario and previous market behavior.

With its inherent volatility, the crypto market still depends on numerous factors, including technological advancements, geopolitical events, and macroeconomic conditions.

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