• Is it too late for the United States to establish its first Bitcoin ETF this year?

  • In one of our recent reports, we highlighted the growing optimism that a cryptocurrency ETF could be approved by the US SEC this year, based on the sentiments expressed by SEC commissioner and crypto enthusiast, Hester Pierce, who stated that the cryptocurrency industry was being treated unfairly and was being judged by a higher standard than traditional markets in the issue of ETFs.

    More recently, during a live session at the B-Word conference last month, she expressed her dissatisfaction with the current situation in which the SEC has yet to approve any Bitcoin ETF in the US, saying, “I would never have imagined that I would be in this situation where we have not yet approved one and other countries are moving ahead.”

    While the community remains hopeful that at least one of the ETF applications pending with the SEC will be approved, with only four months left in 2021, those hopes appear to be fading.

    There are currently at least 12 Bitcoin ETF applications pending with the SEC, as well as several Ethereum ETF applications. VanEck, a global investment management firm, filed the first, VanEck Bitcoin trust, in March 2021. Several of the firm’s Bitcoin ETF applications have been rejected over the years. Its current application, which the SEC has yet to decide on but is formally reviewing, is one of the leading candidates for approval.

    Valkyrie Bitcoin Trust, NYDIG Bitcoin Trust, WisdomTree Bitcoin Trust, First Trust SkyBridge Bitcoin ETF Trust, and Wise Origin Bitcoin Trust are among the others. Notably, as of May, 5 of the ETF applications had had 19b-4 forms filed on their behalf, which obligates the SEC to weigh in on their decision or extend the review period within 45 days. So far, the SEC has been delaying the decision, citing the need for more time to gather public input and weigh the risks and benefits for consumers.

    Other countries, most notably Canada and Brazil, already have several Bitcoin and Ethereum ETFs trading on their exchanges, and the funds are doing well in the markets.

    Pierre’s B-Word statement also chastised the SEC, stating that the regulatory body was not a merits regulator but was instead to regulate in accordance with the wishes of the people.

    Significantly, SEC chair Gary Gensler, whose appointment sparked excitement in the crypto community because he was thought to be a Bitcoin supporter, has proven to be less enthusiastic so far. The SEC’s recently released agenda of priorities for 2021 did not include cryptocurrencies as a significant item.

    Despite the fact that the development did not go as planned, the community remains optimistic. Even if approval does not occur in 2021, the following year will most likely bring the day closer. As interest and adoption grow, so will the number of applications, putting pressure on the SEC to make a decision as soon as possible.

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