Will the SEC approve Bitcoin ETFs in 2023 or 2024?

The crypto market is full of its fair share of anticipation and uncertainty regarding Bitcoin ETFs (currency exchange traded funds).

The US Securities and Exchange Commission's (SEC) hesitant stance on crypto assets, in contrast to the growing demand for Bitcoin ETFs, has sparked intense debate among investors and financial institutions.

Interest will grow for a spot Bitcoin ETF

Bitcoin's price trajectory suggests higher optimism. The price rose to $30,716.24, up 2.7 percent from the start of the week. This frenzy was fueled by a sense of optimism surrounding Bitcoin ETFs. It also comes amid heightened trading activity and a regulatory maelstrom that has historically overshadowed crypt's liquidity.

Investors are looking at the end of 2023 to the first half of 2024 as a window for Bitcoin ETF approval. This prospect has been further boosted by several companies recently amending their SEC filings to address concerns raised earlier, a move seen as a positive engagement between the SEC and these companies.

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SEC Commissioner Hester Pierce's comments shed light on the regulatory body's internal dynamics. In revealing her long-term support for the Bitcoin ETF, Pierce candidly shared her secret on the SEC's reluctance.

She pointed out the crucial role of the Greyscale ETF issue in this scenario. However, her inability to gauge her colleagues' approach highlights the inherent uncertainty of this topic.

“I can't say exactly what we will do with the products traded on the bitcoin exchange. I can say in general that the agency was not very good when it comes to anything related to Bitcoin or other crypto assets. And, look, I hope they wake up and think, you know what, we need to take a more effective approach. That hasn't happened yet,” Pearce said.

Pierce also acknowledged interest in Bitcoin ETFs from corporations and investors. However, she cautioned against reading too much into the tea leaves to predict the SEC's next move. This may cause the market to mix optimism with skepticism.

Diversity expectations

This narrative plays out amid the widespread, albeit cautious, adoption of ETFs in the financial industry. In the year In 2016, Vanguard CEO Bill McNabb said he was concerned about the rapid expansion of ETFs. It is similar to the mutual fund situation of the 1980s, which did not end well.

“It's the industry. [introducing a new] ETF, which appears every 30 seconds. This is like the 1980s and mutual funds. Things didn't end well for all those funds… we have to be very careful. If we go too far as an industry, people will be skeptical about the initial build. And some of the categories are pretty cool,” McNabb said.

Despite these concerns, the ETF landscape has seen explosive growth, crossing the 10,000 mark globally at the end of September.

The larger context, which weighs the appeal of crypto and the diversification they offer against the risks and regulatory hurdles, has fueled the conversation around Bitcoin ETFs. According to a study, the past performance of specific ETFs, which suffered a risk-adjusted loss of about 30% in the first five years, casts a long shadow on the viability and performance of a potential Bitcoin ETF.

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But the crypto market, driven by the “what if” narrative, continues to show resilience in the face of these threats. High-profile endorsements, revised SEC filings and rising bitcoin prices ended the market as expected.

“The fact that the SEC has chosen to ask questions is a change in behavior. So, I think there's growing hope that one — or several — Bitcoin ETFs will be approved,” confirmed Cathy Wood, CEO of Arc Invest.

Regulatory hurdles and the need for a productive approach from the SEC paved the way for Bitcoin ETFs. However, the appeal of diversified investment vehicles like Bitcoin ETFs and a market thirsty for innovation keeps the prospect alive.

I can't go into detail about anything, but this is an example of the interest in crypto and the importance of crypto we hear from customers around the world. I think some of this rally is way beyond the hype,” said BlackRock CEO Larry Fink.

Only time will tell if the SEC approves any Bitcoin ETF and a more progressive regulatory outlook.