Inside the SEC’s Strategy: Synchronizing Crypto ETF Approvals for 2023

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Recently, the U.S. Securities and Exchange Commission (SEC) has delayed decisions on pivotal applications in the cryptocurrency ETF sector. This includes Hashdex’s proposal to convert its Bitcoin Futures ETF into a spot ETF and Grayscale’s new futures-based Ether ETF application.

Speaking to CoinDesk, Quinn Thompson, Maple Head of Growth and Capital Markets, shed light on the SEC’s postponement strategy. According to Thompson, this delay is an organizational move by the SEC to align multiple ETF applications for a simultaneous launch in January. He indicated that this coordination is likely due to the SEC seeking clarity, especially amidst concerns about a potential government shutdown.

Thompson explained, “The SEC intends to prepare all applications for a collective launch, similar to what we observed with the Ethereum Futures ETF last month. This means that if one application, like Black Rock’s, is delayed, others, like Hash Dex’s, will also face postponement. It’s largely an administrative strategy, likely influenced by the assurance that there won’t be a government shutdown.”

Regarding the first-mover advantage in this space, Thompson predicts favorable outcomes for leading firms such as BlackRock, Invesco, and Galaxy. However, he also notes the challenges that might confront smaller entities in the sector. Nevertheless, Thompson emphasizes the overall beneficial impact on the industry, with institutional finance teams increasingly advocating for crypto allocations among investors and asset allocators.

As the market eagerly anticipates the SEC’s decision on a spot Bitcoin ETF, expected within an eight-day window, there are indications of active engagement between the SEC and cryptocurrency exchanges. Eric Balchunas, Senior ETF Analyst at Bloomberg, highlighted ongoing discussions between the SEC and exchanges about a spot Bitcoin ETF. Balchunas mentioned in a recent tweet that the SEC’s Trading and Markets division is advising these exchanges on necessary amendments, signaling a progressive dialogue in the cryptocurrency regulatory landscape.