Spot Bitcoin ETF Approval is Unlikely to Change Regulatory Environment in the US + More News

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The approval of spot bitcoin (BTC) exchange-traded fund (ETF) will be a key step forward, say Steve Scott and AJ Nary of digital asset custody firm BitGo, but it’s unlikely that the bigger regulatory picture will be resolved any time soon in the US.

As published in the American Banker, BTC is the only digital asset considered a commodity at this time, so “a spot bitcoin ETF won’t likely pave a quick path to, say, an ETF basket of crypto assets.”

Nonetheless, it will allow advisors and investors to transition into the new asset class via ETFs as a familiar vehicle, said Scott and Nary.

They argued that,

“The approval of a spot bitcoin [ETF] is almost certainly a matter of “when” rather than “if.” Yet, bitcoin ETF approvals likely won’t come as soon as many people in the crypto industry would like to believe.”

The two opined that we are likely to see another round of application rejections given the continued lack of clear market structure that led to the downfall of the crypto exchange FTX.

“In other words, the lack of separation of custody and trading will continue to serve as a stumbling block for approval until it is fully addressed.”

Therefore, ETF applicants will likely need to show to the US Securities and Exchange Commission (SEC) that their assets will be custodied with one provider, ideally a qualified custodian, and traded using a different entity.

Whichever asset management company gets the first approval, a group of investment companies’ applications that satisfy the above-stated requirement could be approved in rapid succession or even all at once.

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