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News/SEC Delays ARK 21Shares Bitcoin ETF Decision to January

SEC Delays ARK 21Shares Bitcoin ETF Decision to January

Van Thanh Le

Sep 29 2023

8 months ago4 minutes read
robot confusing about SEC decision to delay bitcoin etf

Navigating through the SEC’s Strategies on Bitcoin ETFs

Heading into 2024, the path ahead for the crypto industry remains veiled as the United States Securities and Exchange Commission (SEC) extends the approval deadline for ARK 21Shares' spot Bitcoin ETF to January 10, 2024. 

Synchronously, GlobalX experiences a similar deferment on its Bitcoin ETF proposal on the analogous day, further ensnaring the ambivalence around anticipated advancements.

Abstaining from direct insight into future propositions on spot Bitcoin ETFs, SEC Chair, Gary Gensler, epitomizes ambiguity, leaving stakeholders within the financial territory in suspense. 

The fog surrounding the regulatory landscape deepens as the D.C. Circuit Court of Appeals pressures the SEC to radically rectify its perception on Bitcoin ETFs. The court admonished the SEC's dismissal in the Grayscale Investments' case, branding the agency's rejection as “arbitrary and capricious.”

Despite the surging demand and judicial pressures, the SEC yet awaits to lit the green signal for any spot Bitcoin ETFs on U.S.-based exchanges, tethering the crypto market to a pillar of uncertainty.


Probing into the Congressional Hearings and the SEC's Stance on Cryptocurrency

In a dynamic showcase of opinions during the congressional hearings, Gensler points an accusing finger at crypto organizations for amalgamating assets recklessly, painting a catastrophic scene in financial governance. 

However, intriguingly, when confronted with inquiries circling Bitcoin ETFs, Gensler recurrently veered away, invoking criticism from the Republican Representative, Patrick McHenry, who indicted the SEC for spearheading a “crusade against the digital assets ecosystem.”

Despite the mounting tensions, Gensler clarified an essential distinction, affirming that Bitcoin, the pioneering cryptocurrency, is distinctively “not a security.”


A Clarion Call for Immediate Action by the Lawmakers

Four legislators with contrasting political allegiances—Mike Flood (R-Neb.), Tom Emmer (R-Minn.), Ritchie Torres (D-N.Y.), and Wiley Nickel (D-N.C.)—echoed a united impetus for swift SEC endorsement of spot Bitcoin ETFs. 

The lawmakers firmly contest that a regulated presence of Bitcoin ETFs could elevate the guardrails for investor protection and manifest a safer, more transparent avenue to Bitcoin trading.

Grounding their argument on the precedent set by the Grayscale court ruling, they helm the movement for faster authorization of spot Bitcoin ETFs, ensuring both investor safety and market fluidity.


Mounting Administrative Challenges for the SEC

In a looming shadow of governmental halts, the SEC girds itself for a government shutdown that could ominously slash its workforce numbers by over 90%. Steering through turbulent times, the agency encounters heated queries like that from Rep. 

Stephen Lynch (D-Mass.), seeking clarity on SEC’s case against Ripple. However, Gensler diplomatically sidesteps the question, citing restrictions imposed by ongoing legal proceedings.


Key Advocacies and Public Statements

Asserting nuance to the wavering stance on Bitcoin ETFs, Gensler states that the decision remains an "active consideration of the commission." On the other side of this divide, the bipartisan lawmakers avow in their letter to Gensler, “Congressional duty is to ensure the SEC's approval aligns with the guidelines set forth by Congress."


Clarity in Progress: SEC Starts Deliberation on Franklin, Hashdex Crypto ETFs

Further entangling the complex web of crypto ETF decisions, the US Securities and Exchange Commission (SEC) now eyes applications for spot crypto exchange-traded funds (ETFs) from financial powerhouses Franklin Templeton and Hashdex. 

Franklin Templeton's filing seeks a Bitcoin spot ETF, while Hashdex proposes a spot Ether ETF, stirring up the crypto space as the SEC steps into the ring to adjudicate. With the Constitution vesting the SEC with a maximum of 240 days to accept or deny an ETF since the date of filing in the Federal Register, the anticipated verdict on these proposed funds is slated for late May 2024.

SEC's history, however, is woven with frequent deferrals, leaning towards using the full 240-day timeframe before settling on a decision. This practice finds its roots in the August ruling where a Federal Appeals Court dictated that the SEC had erred in its dismissal of Grayscale Investments' request to convert its Grayscale Bitcoin Trust into an ETF. The court ordered a reevaluation, hinting at a looming uncertainty around the agency's future actions.


Analyst Places Bet: SEC Unlikely to Approve Bitcoin ETF Application This Year

Of late, the SEC's decision to delay ArkInvest and 21Shares ETF's Bitcoin ETF filings have sparked conjecture, swaying belief towards an unlikely approval this year. 

Bloomberg Analyst, James Seyffart, voices the same tone, suggesting a grim possibility of future delays on pending filings from financial titans like BlackRock, Bitwise, VanEck, Invesco, Wisdomtree, Fidelity, and Valkyrie.

Seyffart theorizes that SEC's prompt deferrals may be engineered to empty its docket before the imminent Federal Government shutdown. Experts have forecast a bleak scenario where the shutdown could furlough a crushing 90% of the SEC's workforce, rendering the governmental body dormant.

Adversely affecting the SEC's decision could be the recent Congressional letter, appealing to cease discriminatory practices against Bitcoin ETFs. An approved Bitcoin ETF has consistently been anticipated by the thriving crypto community, seen as a key player in galvanizing market recovery and amplifying participation in the crypto ecosystem. Such approval can usher traditional market investors into the crypto sector, sparking a proliferation in crypto asset exposure.

Despite Grayscale's recent victory above the SEC, and a flood of Bitcoin ETF applications inundating the agency from established financial mainstays, the SEC has maintained its stringent vetting process. 

Seyffart's views echo within the crypto analytical sphere, resonating with the possibility of a Bitcoin ETF authorization appearing more elusive than ever.


Parallels and Divergences: The U.S. and EU Regulatory Trajectories

While the U.S. delicately balances the essence of innovation and the urgency for investor protection, its regulatory topography remains fractionated, posing significant challenges for seamless policies. 

Contrasting this, the European Union (EU) takes a decisive stride forward with the MiCAR Regulation, envisioning a harmonized roadmap for crypto-asset regulation transcending all member states. The regulation has been devised to reinforce investor safety, invigorate market veracity, and sustain financial equilibrium.


SEC Postpones Decision on BlackRock, Invesco, and Bitwise Spot Bitcoin ETF

The US SEC maintains its trend of deferrals, this time setting back the ruling on spot Bitcoin ETF propositions laid forth by financial powerhouses like BlackRock, Invesco, Valkyrie, and Bitwise. Fidelity, VanEck, and WidsomTree's filings also teeter on the brink of delay.

The SEC ostensibly prepones the deferment fortnight earlier than the stipulated second-delay deadline slated for mid-October. Notably, the postponement precedes a probable government shutdown forecasted for October 1, impending financial turbulence for federal agencies and regulatory bodies.

Analyst James Seyffart from Bloomberg associates this temporal coincidence to the looming shutdown, forecasting subsequent deferrals in mid-January. He hints that, owing to the cascading delays, the SEC is under compulsion to deliver definitive ETF rulings by mid-March, at the latest.

The World Federation of Exchanges (WFE), on the other hand, delineates a promising trajectory for crypto-asset trading platforms (CTPs), projecting an influential role in the economy. WFE endorses regulation-based policies to elevate CTP standards, reinforcing customer trust.

The SEC yet remains noncommittal, oscillating between approval and rejection, fostering a climate of regulatory paradox.


SEC Invites Public Opinion: The Fate of Spot ETFs Hangs in Balance

On September 28, the SEC welcomed public discourse on numerous facets tied to spot Bitcoin ETFs. Stipulated areas of discussion encompass vulnerability to fraud and market manipulation, resistance offered by Bitcoin's decentralized framework, and envisaging surveillance-sharing accords with platforms like Coinbase.

Endorsing complete transparency, official SEC orders are now accessible for ETFs proposed by BlackRock, Valkyrie, Invesco, and Bitwise, with Bitwise earning an extensive 88-page order.

The invitation for public opinion doesn't necessarily entail further delays but could stretch the proceedings to account for the newly gathered information. The SEC retains authority to approve, reject, or solicit new ETF applications.

However, the SEC's overarching tone seems to lean towards negativity, citing potential grounds for disapproval. Interestingly, earlier approval of Bitcoin futures ETFs raises the question of correlation between the spot Bitcoin markets and the CME Bitcoin futures market, further influencing the SEC's decision on spot Bitcoin ETFs.


Final Impact

Flooring the gas pedal and the brake simultaneously, the SEC's cautious dance with cryptocurrency regulation and its non-committal approach, particularly regarding spot Bitcoin ETFs, begets tension within the regulatory halls and lawmaking bodies. 

As lawmakers argue that the ongoing delay is sculpting a "lasting damage" on the industry, SEC's firm standpoint seems like a stark contrast to the EU's more harmonious approach, nurturing innovation alongside robust investor protection.

The lack of a consistent U.S. regulatory framework remains a towering impediment, cloaking the future of the crypto industry in uncertainty.


FAQs 

1. What is the current status of Bitcoin ETFs in the U.S.?

The deadline for ARK 21Shares' spot Bitcoin ETF has been extended to January 10, 2024. Moreover, the Bitcoin ETF by GlobalX has also been deferred. Currently, the SEC has not approved any spot Bitcoin ETFs for U.S. exchanges.

2. What did the congressional hearings reveal about the SEC's stance on cryptocurrencies?

Gary Gensler, the SEC Chair, criticized crypto companies for potentially mixing risky assets but avoided questions about Bitcoin ETFs. Gensler later confirmed that Bitcoin is not a security.

3. How are U.S. lawmakers responding to the delay in spot Bitcoin ETF approvals?

Four U.S. representatives have urged the SEC to approve spot Bitcoin ETFs immediately. They believe that regulated Bitcoin ETFs could boost investor protection and enhance transparent access to Bitcoin.

4. How might a potential government shutdown affect the SEC?

A looming government shutdown could force the SEC to operate with a reduced staff cut by over 90%.

5. How do U.S. and EU crypto regulatory approaches differ?

While the U.S. aims to balance innovation and investor protection, its regulatory landscape is fragmented. The EU has adopted the MiCAR Regulation, striving for a unified regulation approach across all member states.

This article has been refined and enhanced by ChatGPT.

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