Industry Analysts at Bernstein Suggest Favorable Odds for US Approval of Spot Bitcoin ETF

The post Industry Analysts at Bernstein Suggest Favorable Odds for US Approval of Spot Bitcoin ETF appeared first on Coinpedia Fintech News

According to a research report from brokerage firm Bernstein, the U.S. Securities and Exchange Commission (SEC) faces a challenging position when it comes to spot bitcoin exchange-traded funds (ETFs), but the likelihood of approval is relatively high.

The SEC has previously approved futures-based bitcoin ETFs and leverage-based futures ETFs, based on the premise that regulated exchanges like the CME provide pricing for futures. However, the SEC has expressed concerns about spot bitcoin ETFs, as spot exchanges such as Coinbase are not under its regulation, and spot prices are considered less reliable and susceptible to manipulation.

SEC has yet to approve bitcoin ETFs

Despite receiving numerous applications, the SEC has yet to approve a spot bitcoin ETF. Recent filings by Blackrock and other asset managers for spot bitcoin ETFs have prompted discussions in the industry.

A notable development mentioned in the report is Grayscale’s attempt to convert its Grayscale Bitcoin Trust (GBTC) into an ETF, which is currently being reviewed by an appeals court. The analysts noted that the court’s response indicated skepticism about differentiating between futures and spot prices.

The report also highlighted suggestions from the industry regarding a surveillance agreement between spot exchange operators and regulated exchanges like Nasdaq. Currently, the absence of a spot bitcoin ETF has led to the popularity of over-the-counter products like the Grayscale Bitcoin Trust (GBTC), which the broker noted are more expensive, illiquid, and inefficient.

The report concluded that the SEC would prefer the introduction of a regulated bitcoin ETF led by mainstream Wall Street participants with surveillance from existing regulated exchanges, rather than relying on OTC products like GBTC to address institutional demand.