While having approved several futures-based Bitcoin ETFs, the SEC's first ruling on a physically backed Bitcoin ETF is due on Sunday — and likely to be "no."
DeFi lender BlockFi has filed for permission to launch a physically backed Bitcoin ETF.
In the Securities and Exchange Commission filing on Nov. 8, BlockFi joined a long and growing list of companies that have filed for permission to launch a cryptocurrency backed exchange-traded fund.
The U.S. regulator has already approved several Bitcoin futures-based ETFs, but is yet to rule on a physically backed, or spot, ETF. Approval is considered a long shot, as SEC Commissioner Gary Gensler has publicly criticized them while backing the futures-based versions.
Gensler has argued that the SEC has broad powers to regulate cryptocurrencies, saying that virtually all meet the definition of securities.
Bloomberg ETF analyst Eric Balchunas suggested that BlockFi probably wanted to "be in the mix long-term" rather than expecting an actual approval anytime soon.
"I'd lay off the hopium until at least next year," he said in a tweet listing the various cryptocurrency ETF proposals.
The SEC is due to issue its first ruling on a spot Bitcoin ETF, the VanEck Bitcoin Trust, on Sunday, Nov. 14. Bloomberg's James Seyffart tweeted that "fully expect a denial" and added:
"Would be shocked if VanEck's filing is approved (despite believing it *should* be approved). BUT, the denial letter should give us insight into SEC's current views/opinions on underlying #Bitcoin market."
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Serious Concerns Remain
So far, the agency has approved five futures-based Bitcoin ETFs beginning with the ProShares Bitcoin Strategy ETF and Valkyrie Bitcoin Strategy ETF. Since then, ETFs by Profunds, Stone Ridge and New York Digital Investment Group (NYDIG) have also been greenlighted.
Gensler, who taught Bitcoin and cryptocurrency at MIT before being tapped to lead the SEC by President Joe Biden, recently compared the cryptocurrency market to "the Wild West," saying that it was "rife with fraud, scams, and abuse."
The most recent of those is the SQUID token, which appears to have been the latest rug pull. The token was said to have been for a planned game themed with the hit Netflix show, but was not affiliated with it. SQUID jumped from $0.01 to more than $500 in a few days before rocketing to more than $2,800 to $0.00079 in a matter of minutes on Nov. 1.
