While a decision from the Securities and Exchange Commission on the future of spot bitcoin ETFs could come as soon as this weekend, Bitwise Asset Management CIO Matt Hougan warns that crypto investors might have to wait a while longer.
Following ARK’s application for the spot iteration of the fund, a June 15 filing in the Federal Register named Aug. 13 as the deadline for the SEC to give a thumbs up or thumbs down on the exchange-traded fund.
But the SEC also has the option to stretch the deadline, with a final response not coming until as late as January 2024 for the Ark, Hougan explained.
“These are complex applications with a lot of data,” he said. “I think they’re likely to extend this until the final review.”
Hougan noted there have been a series of positive indicators for the fund’s approval, such as surveillance-sharing agreements between exchanges and custodians, a more regulated and robust bitcoin futures market, and a better understanding of crypto custody and broker transfer.
“The totality of circumstances is what the SEC is looking at,” Hougan said. “I don’t think there’s any silver bullet.”
While classification of cryptocurrencies and the funds that track them have been a point of deliberation among investors and institutions alike, the SEC has firmly labeled the bitcoin as a commodity, something that Hougan agrees with.
“It’s so decentralized, we don’t know who created it,” he explained of the flagship coin. “There’s no single person in charge of it, it’s globally distributed. There are no insiders, all the information is public. And that’s what makes it clearly a commodity.”
But as you go from bitcoin to Ethereum and other assets, Hougan said, the degree of centralized control increases and the question will eventually get more complex, an obstacle he believes legislation will solve.
“You have the two largest regulators disagreeing on whether most crypto assets are securities or commodities,” Hougan added, referring to past classification efforts between the SEC and the Commodity Futures Trading Commission.
“The right solution there is for legislators to come through and make that clear so that U.S. innovators can win in the market.”
Besides Ark, eight other organizations including Hougan’s firm, Bitwise, have filed applications for a spot bitcoin ETF. Grayscale has also filed to convert its Grayscale Bitcoin Trust into a spot fund.
Should the SEC move forward with the approval process, he said the best outcome for investors would be the approval of multiple products.
“I think there should be a fair playing field that allows us to have multiple spot Bitcoin ETFs that compete in the market,” Hougan said. “It will allow prices to be the lowest, it will allow competition to be the highest, [and] it will allow service to be the highest.”