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"Key Facts:
- Upon approval, the U.S. Securities and Exchange Commission (SEC) will legitimize the regulated review industry.
- Applications from Grayscale, BlackRock, and nine other asset management giants are pending review.
The number of proposals to launch a physically-backed Bitcoin ETF in the U.S. market indicates high interest in this financial product. However, the demand for this service, which directly promotes investment in the first cryptocurrency by cash means, has been suppressed due to the delays and rejections of applications submitted by the U.S. Securities and Exchange Commission (SEC) over the years.
Strangely, the refusals of regulatory agencies have intensified FOMO (fear of missing out), triggering all the trends related to Bitcoin physically-backed ETFs. At the same time, it has also increased expectations of one or more of them being approved in the near term.
The arrival of cash-based Bitcoin funds marks a before and after in the industry. This can be inferred from the impact generated by the approval of Bitcoin ETFs in the past, an effect that led to the explosion of positive factors surrounding decentralized finance.
The first Bitcoin futures ETF approved in the United States was ProShares Bitcoin Strategy, which obtained the SEC's approval in October 2021. As reported at the time by CriptoNoticias, it raised over $1 billion on its first day of trading on Wall Street.
This made it the second-highest-grossing ETF on its first day of trading. The first was the United States Carbon Transition Readiness Project, launched by BlackRock in the same year.
Like ProShares Bitcoin Strategy, the ETF opened new doors for institutional investors to enter the market in a more convenient manner. Its market launch increased demand for this pioneering cryptocurrency, as large investors prefer to invest in cryptocurrencies through traditional financial instruments.
Therefore, the legend of physically-backed Bitcoin ETFs experienced in the United States will not be an exception. Considering what has happened in the past, it should be expected that the approval of these new tools will promote financial adoption.
With more institutional investors entering the market, new economic opportunities will arise, encouraging the development of new solutions and services related to Bitcoin and other cryptocurrencies.
The approval of the first futures-based Bitcoin ETF in the United States has had a positive impact on the cryptocurrency industry. Data source: CriptoNoticias Composition. The Prehistory of the Bitcoin Spot ETF: An Industry Marked by Fraud
The SEC has had various reasons for refusing to approve Bitcoin ETFs in the past. Some of the main reasons include concerns that investors might face market manipulation, operational failures, or counterparty defaults.
The committee insisted that the cryptocurrency industry is nothing more than a non-compliant ""wild west."" As SEC Chairman Gary Gensler said earlier, ""It's an area full of fraud, abuses, and misconduct.""
Therefore, the agency has been strict in its review of cryptocurrency companies, particularly major cryptocurrency exchanges like Binance, Coinbase, and Kraken. It also attacked projects that initiated initial coin offerings (ICOs), which, for regulators, were equivalent to selling unregistered securities.
Cryptocurrency exchanges are not regulated, do not have the same disclosure requirements, and do not comply with the same regulatory standards as traditional markets, which has been a major concern for U.S. regulators.
As mentioned earlier in this article, the SEC has approved some ETFs tracking CME Bitcoin futures. This is because the committee regulates Bitcoin futures ETFs under the 1940 Investment Company Act, typically following the same regulatory requirements as mutual funds and unit investment trusts. In other words, it follows the same rules governing traditional financial systems.
The difference lies in the fact that the price of a physically-backed Bitcoin ETF is based on certain indices that are directly related to the prices of assets deposited in cryptocurrency exchanges. The obstacle is that several companies have been sued by the SEC for violating U.S. securities laws.
Therefore, one of the expected positive aspects after the approval of the new Bitcoin ETFs is that the dark regulatory environment in which the U.S. cryptocurrency industry has been operating for years will be cleared.
Applications for Bitcoin physically-backed ETFs are pending from Grayscale, BlackRock, and nine of the world's largest asset management companies. When they are approved to submit proposals, this will mean that the U.S. Securities and Exchange Commission will recognize Bitcoin exchange-traded funds as regulated, safe, and trustworthy tools.
Once approved, this institution will provide significant regulatory recognition to Bitcoin as a legitimate asset class. Through this, it will send a signal to large investors: peer-to-peer digital cash has been accepted and approved by financial authorities.
The approval of Bitcoin physically-backed ETFs in the U.S. market will bring new challenges for both new and existing investors.
Likewise, the establishment of new guidelines and clear standards for regulation, asset custody, and regulatory compliance will pose new challenges to regulatory agencies and policymakers.
In this sense, the clear regulatory framework for the U.S. cryptocurrency industry will be more evident, as there are still barriers to overcome.
On the other hand, as the rules of the Bitcoin market become more clear, the U.S. will set a precedent for the entire industry. Based on this, common standards can be established with other countries or regions to address regulatory challenges, such as Europe, which has already developed a comprehensive set of rules for digital assets and their use, such as the Cryptocurrency Asset" |
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Post time 25-10-2023 13:26:17
