The chances of the Bitcoin spot exchange-traded fund (ETF) getting approved by the U.S. Securities and Exchange Commission (SEC) are very high, according to Bloomberg analyst Eric Balchunas. They estimate that the probability of the ETF failing has decreased from 10% to 5%.
A Bitcoin spot ETF has been a long-awaited and highly anticipated development in the crypto industry, as it is expected to boost the adoption and legitimacy of Bitcoin and increase its liquidity and price stability.
The SEC has been reluctant to approve a Bitcoin spot ETF, citing market manipulation, fraud, and investor protection concerns. However, the situation has changed recently, as the SEC has been ordered by a federal court to review and approve a Bitcoin spot ETF application by Valkyrie Digital Assets by January 10, 2024.
This ruling came after the SEC failed to meet the statutory deadline of 240 days to decide on the application, which was filed in June 2023. The court also rejected the SEC’s request for an extension, saying that the agency had enough time and resources to evaluate the proposal.
The court’s order has set a precedent and a deadline for the SEC to approve other pending Bitcoin spot ETF applications, such as those by VanEck, WisdomTree, and BlackRock. Bloomberg ETF analyst Eric Balchunas said that the probability of the Bitcoin spot ETF failing has dropped from 10% to just 5%, as the reasons for potential failure are unlikely to happen.
Bitcoin ETF Approval Hurdles
Bloomberg Analyst James Seyffart outlined three possible scenarios that could prevent the approval of the Bitcoin spot ETF in response to a follower’s question on Twitter. However, he also explained why these scenarios are improbable.
Ark Invest withdraws with reassurance regarding March: Ark Invest is one of the most prominent and influential supporters of the Bitcoin spot ETF, and its withdrawal could signal a lack of confidence in the approval process. However, Seyffart said this scenario is possible but unlikely, as Ark Invest has not indicated any intention to withdraw.
Gary Gensler overstates the issue, and the SEC refuses to advance new grounds or ignores the court. Gary Gensler is the chairman of the SEC, and he has been vocal about his skepticism and caution regarding crypto-related products. However, Seyffart said this scenario does not seem likely, as the court’s order binds the SEC and cannot ignore or defy it without legal consequences.
The Biden administration intervenes to stop the process: The Biden administration has the power to influence the SEC’s decisions, as it can appoint or remove its commissioners. However, Seyffart said this is another unlikely scenario, as the administration has not shown any interest or hostility towards the Bitcoin spot ETF.
Balchunas agreed with Seyffart’s analysis but suggested that the probability of failure might be closer to 5%. He said keeping a small window open for such possibilities is important, as the crypto market is unpredictable and volatile.
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