Exclusive interview with a Bloomberg analyst SEC may simultaneously approve all Bitcoin spot ETFs, and Ethereum spot ETF may be approved in May next year.

Exclusive Interview with Bloomberg Analyst SEC Expected to Approve Multiple Bitcoin Spot ETFs Simultaneously, Ethereum Spot ETF Likely to Receive Approval in May 2022

Source: The Block

Compiled by: LianGuaiBitpushNews Mary Liu

Bloomberg News ETF research analyst James Seyffart, who is familiar to the crypto community for his predictions and tracking of the progress of physically-backed Bitcoin ETFs, is widely believed to have the potential approval on the horizon, influenced by their views.

• Weekly Selection| Bitcoin Plunges 7% on Monday, Over $450 Million Long Positions Liquidated; Inscriptions’ Popularity Reaches New Heights
• Why is the path to decentralization of the L2 sorter harder than reaching the blue sky?
• Navigating the Cryptocurrency Rollercoaster: Strategy as an Art Form

While appearing on The Scoop podcast, Seyffart reiterated the potential window for physically-backed Bitcoin: January 8th to January 10th, 2024.

Since October, Seyffart has been stating a 90% likelihood of approval by January 10th, which is the deadline for the resolutions of applications by Ark and 21Shares that were submitted in April, ahead of financial giant BlackRock in June, and there are 12 other companies in the space. So far, the U.S. Securities and Exchange Commission (SEC) has repeatedly delayed making a decision, but for the Ark and 21Shares ETFs, it must make an approval or rejection decision before the January 10th deadline.

Seyffart believes that the SEC has been “tactically” delaying in order to schedule various applications, or at least to obtain simultaneous approvals to avoid giving any one company an advantage–which is also why Seyffart believes that all approvals will be received in January.

He said, “However, if the SEC were to reject them at that time, then they wouldn’t really be a rational regulatory agency.”

SEC doesn’t want to play the role of “kingmaker”

Seyffart stated that the SEC “doesn’t want to pick winners in terms of who’s going to get the most assets or who’s going to get the most liquidity. And so, if they’re going to approve all these things, they’re likely to just approve them all at once, because they don’t want to play the role of kingmaker in that scenario.”

When asked about the reason, Seyffart said, “We’ve heard complaints from different people, including people who are involved in this process and other people who know the stakeholders.”

He added, “We have very credible sources, but there are also sources where the reliability is uncertain. But we’ve heard similar things from different people, different angles, for over a year now. But, it is indeed important, trying to piece things together, looking at the calendar, looking at all of the application and deadline dates, trying to put together the pieces of the puzzle.”

Seyffart continued by saying that the prospect of large-scale approval is unusual compared to traditional ETF applications. In traditional ETF applications, if a company is the first to apply and receives SEC approval, it will be the first to list the product. However, cryptocurrency-related products are a unique case. Earlier this year, multiple Ethereum futures ETFs received approval at the same time.

Analysts said, “Different participants (regarding Ethereum futures ETFs) took a lot of measures. Especially Valkyrie, some other issuers were scrambling, but the SEC basically made every effort to ensure that each applicant was approved on the same day. Therefore, this indicates to us that if the SEC approves, a spot Bitcoin ETF will follow a similar trajectory.”

The impact of Grayscale’s approval on a spot Bitcoin ETF

Seyffart stated that Grayscale Investments’ successful lawsuit against the SEC in August to convert its flagship product, the Grayscale Bitcoin Trust (GBTC), into a spot Bitcoin ETF, is another major factor that the SEC might approve.

He said, “I think the SEC has been backed into a corner. Judges basically overturned every decision and reasoning that was used in the past to reject ETFs. I think the SEC and Chairman Gary Gensler know they went a little too far and now find themselves in a difficult situation.”

He believes that Grayscale’s case eliminates the need for a supervision sharing agreement, similar to the agreements that many applicants currently have with Coinbase. However, because this situation is unprecedented, there are no guidelines for response time or approval process to follow. Seyffart pointed out that despite ongoing meetings between Grayscale and the SEC, the situation remains somewhat unique.

He added, “So my take is, if there’s a company that’s not approved on the first day, it might be Grayscale.”

Ethereum spot ETF may take longer

Although the prospect of a spot Bitcoin ETF approval is optimistic, Seyffart states that the prospect of an Ethereum spot ETF is a “completely different situation”.

Seyffart states that he can almost guess how the SEC and Gensler would argue about how Ethereum products are different and highlight the differences between the futures market, which is not as robust or institutionalized as Bitcoin, emphasizing the differences between Bitcoin’s proof-of-work model and Ethereum’s proof-of-stake model.

He added that he disagrees with these views, but if the SEC wants to halt this process, it may delay the decision or assert that Ethereum is a security.

However, in Seyffart’s view, the SEC has implicitly accepted Ethereum as a commodity. He pointed out that the deadlines for the Ark/21Shares and VanEck spot Ethereum ETF resolutions are May 23 and May 24, respectively. Therefore, he believes that the spot Ethereum ETF is “more likely” to be approved before the end of May.

He said, “This doesn’t mean they automatically get approved, but I do think if the spot Bitcoin ETF gets approved, that’s a 100% positive signal, a very positive sign that we could see the spot Ethereum ETF get approved, but it’s not a 90% certainty, that’s for sure.”

Potential timeline between approval and launch

The simple answer is that the potential timeline between approval and launch of the spot Bitcoin ETF is still uncertain.

Seyffart noted that approval falls under the SEC’s Division of Trading and Markets 19b-4 process. However, for an ETF to launch and begin trading, its S-1 registration statement must first be approved by the SEC’s Division of Corporation Finance, which provides the issuer’s business operations and financial details.

Seyffart added that multiple meetings have already been held between the SEC and issuers to address these issues, which lead him to believe that once 19b-4 is approved, the signing of the S-1 could happen. Conversely, if the SEC is not prepared, they may only provide approval for the 19b-4, and listing will be delayed until the S-1 is approved, which could take days or weeks. However, he emphasized that predicting the exact timeline is uncertain.

Seyffart emphasized that if these funds list, the cautious approach of mainstream brokerage firms and banks (characterized by strict due diligence processes and the requirement of a long track record) may slow down their adoption. He said, “So, not all advisors will immediately allocate a percentage of their clients’ portfolios to them.”

People who buy the product immediately may be more inclined towards independent IRAs or independent advisors, where some funds are simply transferred from existing Grayscale trusts or the international crypto ETF ecosystem. Seyffart said, “That being said, if there is anyone who can add it quickly, it would likely be BlackRock, because they have very good relationships with all these types of platforms.”

Seyffart said, “Obviously, I think the first day they launch will see a massive inflow of funds, I would guess in the hundreds of millions of dollars. And over a longer time frame, there is no doubt that billions of dollars will flow into these products – the world’s largest asset management company (referring to BlackRock) is trying to launch these products and participate in the competition for a reason.”

We will continue to update Blocking; if you have any questions or suggestions, please contact us!