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Concerns Mount Over Potential SEC Rejection of Spot Bitcoin ETFs, Analyst Weighs In Skip to main content

Concerns Mount Over Potential SEC Rejection of Spot Bitcoin ETFs, Analyst Weighs In

Concerns Mount Over Potential SEC Rejecting Spot Bitcoin ETFs, Analyst Weighs In

The possibility of the U.S. Securities and Exchange Commission (SEC) rejecting spot bitcoin exchange-traded funds (ETFs) became a concern after financial watchdog group Better Markets called on the securities regulator to reject spot bitcoin ETFs, warning that approvals will lead to “financial carnage” and “massive investor harm.” The SEC is expected to make a decision on spot bitcoin ETFs early next week, and trading could begin as soon as Jan. 11.

Will SEC Reject Spot Bitcoin ETF Applications?

Concerns gripped the crypto community following Friday’s letter from Better Markets, a financial watchdog group, urging the U.S. Securities and Exchange Commission (SEC) to reject spot bitcoin exchange-traded funds (ETFs).

The group argued that the SEC has a legal obligation to deny these applications, warning of potential “financial carnage” and “massive investor harm” if spot bitcoin ETFs are approved. The group features Senator Elizabeth Warren (D-MA) as a top testimonial on its website and its CEO is reportedly close to SEC Chairman Gary Gensler.

Following Bloomberg’s report on Friday that “the SEC hasn’t voted” and some interpreting this as a possible “rug pull,” Bloomberg analyst Eric Balchunas offered his analysis, explaining why a “rug pull” is unlikely. He pointed out that the SEC has never voted on any bitcoin ETFs, neither for spot bitcoin ETF rejections nor bitcoin futures approvals. “They were denied or approved via ‘Delegated Authority,'” he clarified, adding that the same method “would make sense here too since this has been a ’10th floor’ driven initiative since the Grayscale win.”

Secondly, the analyst detailed:

If they did vote they’d have to have publicly scheduled a meeting. Next one is on the 11th but that would be too late for 1/11 launch, so prob not relevant.

The deadline for the SEC to make a decision on a spot bitcoin ETF this year is Jan. 10 for a joint proposal from Cathie Wood’s Ark Invest and 21shares.

Moreover, he said if there were a vote, it’s hard to imagine that SEC Chairman Gary Gensler would vote no because “there’s no basis to deny” and “he is literally the one who directed the [SEC] staff to put in thousands of man hours to work with 11 [spot bitcoin ETF] issuers on 5-10 rounds of comments, and most recently telling them they want these lined up for 1/11 launch.” Nonetheless, the analyst stressed: “We still won’t go to 100% odds [of approval] until SEC makes it official (just like ESPN won’t go to 100% winning chance until the game is literally over regardless of score).”

The SEC is expected to make a decision on spot bitcoin ETFs early next week. Citing multiple sources, Balchunas stated on Friday that final S-1 filings are due at 8 a.m. on Monday, noting that the SEC is attempting to line up spot bitcoin ETFs for launch on Jan. 11.

Do you think the SEC will reject spot bitcoin ETFs? Let us know in the comments section below.

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