Matrixport, a crypto investment services provider, predicts that the U.S. Securities and Exchange Commission (SEC) will reject all applications to list a spot bitcoin exchange-traded fund (ETF). The current five-person voting Commissioners leadership, led by SEC Chair Gensler, is not embracing cryptocurrency in the U.S., and it might be a long shot to expect him to approve bitcoin spot ETFs. Gensler still sees the industry as needing more stringent compliance.
SEC's Rejection of Bitcoin Spot ETFs
The SEC has rejected multiple applications to launch spot bitcoin ETFs in recent years, arguing that the cryptocurrency market is vulnerable to manipulation. However, there have been increasing signs that regulators are prepared to sign off on at least some of the 13 proposed ETFs. Some issuers have made changes to the technical details of their ETF proposals, such as allowing cash redemptions and updating fee structures .
Impact of Bitcoin Spot ETF Rejection
The widespread anticipation of a spot BTC ETF approval in the U.S. helped drive bitcoin prices to levels not seen since April 2022, with a nearly 160% increase in 2023. Matrixport estimates that of the extra $14 billion of fiat and leverage deployed into crypto since $10 billion might be related to ETF expectations. The rejection of Bitcoin spot ETFs could potentially impact the growth of the cryptocurrency market and the overall adoption of digital assets.
In conclusion, Matrixport's prediction that the SEC will reject all applications for Bitcoin spot ETFs highlights the ongoing regulatory challenges and concerns surrounding the cryptocurrency market. Despite the potential benefits of a spot Bitcoin ETF, the SEC's focus on investor protection and compliance with regulations may continue to hinder the approval of such financial products.