The SEC delays spot bitcoin ETF applications

On August 31, 2023, the U.S. Securities and Exchange Commission (SEC) made a significant decision to delay the review of all spot Bitcoin exchange-traded fund (ETF) applications until October of the same year. This decision affected applicants such as BlackRock, WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise, and Valkyrie Digital Assets.
 

The delay followed a period of anticipation within the bitcoin community, as many speculated on the potential for the SEC to approve a spot Bitcoin ETF in the U.S. for the first time. This speculation was further fueled by a court ruling on August 29, 2023, where the D.C. Circuit Court of Appeals found some of the SEC’s reasons for rejecting previous Bitcoin ETF applications to be “arbitrary and capricious.” The court’s decision came after Grayscale Investments challenged the SEC’s rejection of its bid to convert the Grayscale Bitcoin Trust into an ETF.
 

The SEC’s postponement allowed for an extended comment period and greater public feedback on the applications. The new deadlines for the various applications were set throughout mid-October, with the SEC having a total of 240 days from the start of its review to make a final decision to approve or deny the applications.
 

This move by the SEC was seen as a continuation of its cautious approach towards bitcoin ETFs. While the SEC had previously approved ETFs that track Bitcoin futures contracts, it had consistently hesitated to allow funds that directly track physical Bitcoin. The delay in August 2023 was consistent with the SEC’s pattern of using the full extent of its review periods before making final decisions on cryptocurrency-related products.