Will Biden’s Executive Order hasten the approval of a spot Bitcoin ETF?

Funding organisations comment on how government actions may effect their applications.

 

According to WisdomTree’s chief legal officer, interagency study may assuage SEC crypto concerns about fraud and manipulation.

According to Global X’s director of research, the executive order has no immediate impact on the SEC’s stance.

Following President Biden’s signing of an executive order on cryptocurrency, US asset managers are hailing the move as a positive sign for the long-awaited spot bitcoin ETF.

The Securities and Exchange Commission’s clearance of such a product, on the other hand, remains unknown.

Consumer protection, financial stability, risk mitigation, the country’s financial leadership, financial inclusion, and responsible innovation are all addressed in the executive order.

Though many have hailed the directive as a significant step forward in the policymaking process, some have informed about the meaningful legislation might take years.

According to Lara Crigger, managing editor of ETF Trends and ETF Database, establishing a consistent framework to prescribe how the government would regulate crypto will decrease bureaucratic red tape and assist would-be spot bitcoin ETF issuers in learning the new rules of the road.

“If you’re the US government and you want to do something revolutionary like authorise the first bitcoin ETF in the US, you’d need this framework in place before you could even think about it,” Crigger added.

Issuers of ETPs weigh in

The licencing of a spot bitcoin ETF by regulators is a matter of when, not if, according to Craig Salm, chief legal officer of Grayscale Investments.

Grayscale Bitcoin Trust (GBTC) is being converted to an ETF by the company. Investors, as well as officials from cryptocurrency startups like Coinbase and BlockFi, have expressed their support for the move. After a 240-day review period, the SEC is expected to make a decision on the conversion by July.

“What the executive order will do is let the SEC to conduct their own studies and come up with their own conclusions,” Salm said. “I believe this will lead to support for a spot bitcoin ETF because the markets are ready.”

The SEC’s representative did not immediately respond to a request for comment.

It’s unusual, according to WisdomTree Chief Legal Officer Ryan Louvar, to see an executive order that encompasses so many federal organisations and takes such a broad approach.

However, financial regulators such as the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Office of the Comptroller of the Currency (OCC) are absent from the executive order. Instead, it relys on the secretary of state, the secretary of the Treasury, and the attorney general to coordinate and provide comments.

“Part of the SEC’s concerns about potential fraud and manipulation are reflected in the order’s request for research and coordination among federal agencies to continue to develop greater depth around the digital asset markets,” Louvar added. “If this research, assessment, and collaboration can assist resolve those issues, I believe it will help spur or at least add to the likelihood for approval.”

A week after the SEC rejected its original proposal, the business modified its ETF application in December to include a direct investment in bitcoin. In Europe, WisdomTree already offers ETPs that hold crypto directly.

Global X, which introduced its first physically backed crypto offers on Thursday, is also offering such items worldwide. The bitcoin and ether ETPs (exchange-traded products) are now available for purchase in Germany, and the company is still working on a US bitcoin ETF, which it first filed with the Securities and Exchange Commission in July.

According to Pedro Palandrani, head of research at Global X, the executive order directs the SEC to develop a roadmap for risk mitigation while simultaneously embracing financial technology advancements, but it has no immediate impact on the agency’s views.

“A spot ETF approval, or lack thereof, is highly dependent on the SEC’s approach to the space, and while it’s difficult to predict how this will evolve over time, the mandate encourages a working strategy toward its possible adoption,” Palandrani said.

The executive order, according to Hany Rashwan, CEO of Swiss ETP issuer 21Shares, is a “major step” that might open doors for the company in the United States. The world’s largest ETP provider, with 28 products trading across Europe, filed a proposal with Ark Invest last year to launch a bitcoin ETF in the United States.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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