The Great Crypto Holdup: SEC Delays Decision On Landmark ETF Applications

The Securities and Exchange Commission deferred its decision Wednesday on two significant cryptocurrency-related ETF applications.

What Happened: Hashdex's proposal to transform its Bitcoin futures ETF into a spot Bitcoin BTC/USD ETF and Grayscale's bid to launch a new Ether ETH/USD futures ETF are both facing extended review periods.

Hashdex initiated the process to convert its existing Bitcoin futures ETF into a spot Bitcoin ETF in September. 

The initial deadline set by the SEC for both decisions was Nov. 17.

Wednesday's filings reveal the SEC has opted to prolong this decision-making time frame.

This delay occurs against a backdrop of growing anticipation for the approval of a spot Bitcoin ETF by the federal regulator.

UPDATE: There's the delay order for @hashdex 's application to convert $DEFI from a #bitcoin futures ETF to an ETF that holds both futures and spot.

h/t @News_Of_Alpha https://t.co/AAHHFiMQBu pic.twitter.com/tWJrYvqOrf

— James Seyffart (@JSeyff) November 15, 2023

The SEC has also declared its intention to extend the time frame for deciding on the proposed rule change regarding Grayscale’s Ethereum Futures Trust.

This extension moves the decision deadline to Jan. 1, 2024.

In its official filing, the SEC said it must "either approve or disapprove or institute proceedings to determine whether to disapprove, the proposed rule change."

This statement indicates the SEC has granted itself an additional period to potentially delay its final decision.

Why It's Important: James Seyffart, a Bloomberg analyst, commented on X, stating the postponement of the 19b-4 filing was not “remotely surprising.”

Historically, the SEC has rejected every proposal for such a product aimed at the general investing public.

In 2023 alone, over a dozen companies have submitted applications for spot Bitcoin ETFs, with several others seeking approval for similar products linked to ether, the cryptocurrency with the second-largest market capitalization.

The SEC has not provided any clear indications regarding its stance on these new applications.

Past rejections by the agency have cited concerns over Bitcoin's vulnerability to market manipulation and the absence of surveillance-sharing agreements.

Applicants argue that these issues have either been resolved or are no longer pertinent, especially following the approval of Bitcoin futures ETFs.

This perspective was also supported by an appeals court earlier this year.

Nevertheless, the SEC has continued to delay its final verdicts on these applications.

BTC Price Action: Interestingly, today's postponements by the SEC have not negatively impacted Bitcoin's price, with the apex crypto having seen an increase of over 5% this afternoon, reaching $37,500.

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