- SEC Recently Called Spot Bitcoin ETF Applications “Inadequate”
- No Spot ETF Leads to the Rise of Alternative OTC Products
- They are too costly, illiquid and less efficient
Recently the brokerage company Bernstein published a report stating that there is a reasonably high probability that the spot ETF will be approved by the regulator. Analysts noted that the SEC has already approved futures ETFs as pricing takes place on the CME regulated exchange.
However, the agency expresses some skepticism towards Bitcoin spot ETFs due to the fact that “spot exchanges such as Coinbase” are not subject to regulation and therefore prices become unreliable and vulnerable to manipulation.
Bernstein analyst Gautam Chhugani stated:
“The court did not find convincing evidence that the futures price is directly dependent on the spot price. Therefore, banning spot ETFs can be a difficult task.”
The report also highlights Grayscale’s attempt to turn its Grayscale Bitcoin Trust (GBTC) fund into an ETF, which is currently under appeal. In addition, the industry is also actively discussing an oversight agreement between the spot exchange operator and a regulated exchange such as Nasdaq.
The report ends by noting that the SEC is leaning more towards introducing a regulated bitcoin ETF aimed at major Wall Street participants, with oversight provided by regulated exchanges. This approach is seen as more acceptable than using OTC products such as GBTC to meet growing institutional demand for investment in BTC.