The move gives the SEC up to 240 days to delay the processing of crypto ETF applications, which means that some companies might not hear decisions on filings made in July 2023 until around March 2024. The agency, which holds the final authority over permitting a crypto ETF, appears to be getting closer to approving such investment vehicles after several years of applications. Stuart Barton, Co-Founder and Chief Investment Officer of Volatility Shares, a firm responsible for a leveraged Bitcoin futures ETF listing, shared that their interaction with the SEC involved negotiations, with the regulator proposing modifications to disclosure documents. He speculated that smaller firms might find it easier to gain SEC approval for a spot crypto ETF offering. While larger companies have been making similar efforts for years without significant progress, the spotlight has shifted towards applications made by major asset management firms including ARK Invest, Bitwise Asset Management, VanEck, WisdomTree, Invesco, Galaxy Digital, Fidelity, and Valkyrie. The hesitance in approving a spot crypto ETF could stem via the nature of the US crypto market, which, although regulated, has raised calls for clearer oversight. The SEC is currently involved in enforcement actions against Coinbase, Binance, and Ripple, and it has also imposed fines on companies like Bittrex. There is a sense that both sides will need to be flexible, as Barton suggested that the SEC might need to be more open-minded and that US lawmakers are considering legislation to define the roles of the SEC and CFTC in regulating digital assets going forward. One of the main obstacles facing approval for a spot crypto ETF by the SEC could be the nature of the investment itself. Bitcoin futures-linked ETFs enable investment in the crypto asset without using an exchange, whereas a spot BTC ETF involves directly holding Bitcoin within a fund for investment purposes.
