SEC’s spot Bitcoin ETF approval “fairly high”: Bernstein

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SEC’s spot Bitcoin ETF approval “fairly high”: Bernstein

By Benson Toti - min read
  • $650 billion asset manager Bernstein believes there’s a good chance of a spot Bitcoin ETF approval.
  • The SEC’s argument for denial of a spot ETF while approving futures ETFs is unlikely to convince the court in the Grayscale vs SEC case.
  • The regulator is likely to approve a spot ETF by a regulated Wall Street giant than deal with OTC products like GBTC, analysts at Bernstein noted.

On July 2, Gemini co-founder Cameron Winklevoss tweeted that it has been 10 years since the Winklevoss twins filed the first spot Bitcoin ETF. Over the decade, the SEC has denied multiple proposals, a scenario that continues even as the crypto market’s outlook shifts increasingly optimistic.

The case is even more pronounced after a flurry of applications involving mainstream Wall Street giants like BlackRock, Fidelity and Invesco.

Among those to voice the latest optimistic tone over the approval of a spot Bitcoin ETF is brokerage firm Bernstein, CoinDesk reported today.

According to experts at the firm, who shared their insights in a research report, the SEC’s approval of futures Bitcoin ETFs and the leveraged futures ETF allowed last week, all leave the regulator with little room to maneouvre in terms of continuing to deny a spot ETF.

The case for a spot ETF

The SEC’s contention that futures pricing is from regulated exchanges such as the CME, as opposed to spot prices that come from crypto exchanges like Coinbase, remains. However, with major asset managers signaling towards market surveillance agreements to address possible manipulation, basically puts the SEC in the spot.

Grayscale’s case against the SEC, which relates to the regulator’s disapproval of a proposal to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF, is another reason why an approval is highly likely.  

[Read more: Grayscale to convert its GBTC to a Bitcoin ETF]

Analysts at Bernstein say that the court is likely not to be “convinced that the futures price is not derived from the spot price.” They also opine that allowing the futures ETFs and not disapproving spot ones could be “a difficult pill to swallow for the courts.”

Their report sums up the outlook thus:

SEC would rather bring in a regulated bitcoin ETF led by more mainstream Wall Street participants and with surveillance from existing regulated exchanges, than having to deal with a Grayscale OTC product filling the institutional gap.”

Market experts see the SEC’s recent quick feedback on recently filed proposals, which has seen Cboe BZX refile spot ETFs for several firms naming Coinbase as the exchange they are having a surveillance sharing agreement with, as a good first step.

Nasdaq has also refiled BlackRock’s ETF proposal, naming Coinbase as the crypto exchange with the SSA.