The U.S. Securities and Exchange Commission (SEC) has rejected numerous spot Bitcoin exchange-traded fund (ETF) applications submitted over the past few years.
Grayscale Investments CEO Michael Sonnenshein said in a recent interview with CNBC at l'ETF Edge that he thinks it's only a matter of time before the SEC approves a spot Bitcoin ETF proposal.
The SEC has rejected every Bitcoin spot ETF proposal it has ever reviewed. But Sonnenshein said the important issue is not whether the SEC will approve one of them, but when.
The SEC has approved several Bitcoin futures ETFs and they are already traded on the exchange. However, the regulatory body expressed its concerns about the lack of regulation in the crypto space. Sonneshein cites regulatory concerns as the reason for his reluctance to approve a spot Bitcoin ETF.
Sonnenshein believes that the SEC will soon approve a spot Bitcoin ETF.
Many experts believe that launching a spot Bitcoin ETF will help attract more institutional investors to the crypto space. Spot Bitcoin ETFs are already traded in some countries, including Canada and Brazil.
What is a Bitcoin ETF?
Bitcoin ETFs are a product that allows people to invest in Bitcoin without buying Bitcoin. ETF stands for Exchange Traded Fund. These are stocks that multiply the value of the underlying asset. The brokerage firm buys a certain amount of Bitcoin as the underlying asset and then issues stocks, ETFs, that replicate the value of Bitcoin.
ETFs are a regulated market, so consumers/investors are protected. ETFs do not need wallets, private keys, and security systems to store Bitcoin, which is as useful as they are difficult.
What worries the Securities and Exchange Commission is Bitcoin's volatility. These weeks have shown that Bitcoin can gain or lose as much as 10-20% of its value in a single day. This prompts the SEC to be very careful not to harm investors.
The entry of institutional investors into the Bitcoin market has increased demand for certain products better suited to this target group. Bitcoin ETFs fill this need.
It's understandable why Bitcoin ETFs are so important at a given market time when inflation threatens to keep cash, but technological skills are not yet sufficient to buy Bitcoin directly from partner exchanges.