Approval of a bitcoin ETF might take longer than expected as SEC Chairman expresses caution

• The approval of a bitcoin ETF could take a lot longer than some might have hoped for.
• Several bitcoin ETF applications are currently under review by the SEC, but Chairman Gary Gensler has expressed caution.
• “There are many challenges and gaps for investor protection in [crypto] markets,” Gensler told Congress last week.
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Investors and fund managers are longing for the Securities and Exchange Commission’s approval of a bitcoin ETF, but recent comments from Chairman Gary Gensler suggest they best not hold their breath.

Bitcoin ETF applications have been under review by the SEC for months, but regulatory scrutiny remains as the applications await a final decision.

Gensler told Congress last week that “there are many challenges and gaps for investor protection in [crypto] markets,” adding that “none of the exchanges trading crypto tokens has registered yet as an exchange with the SEC.”

His comments suggest that the SEC wants to have more regulatory oversight of cryptocurrencies before it approves a slew of bitcoin etf applications. Current bitcoin ETF applicants awaiting approval from the SEC include Fidelity, WisdomTree, and VanEck, among others.

VanEck’s bitcoin ETF filing was supposed to receive a decision from the SEC on April 28, but hours before the deadline, the agency delayed the decision to June at the earliest.

“I expect that [delay] to happen with all of our filings, to be honest,” Laura Morrison, global head of listings at CBOE, told the Financial Times. Many of the bitcoin ETF applications have picked the CBOE as the exchange to list on.

Enthusiasm for Gensler among the crypto community was strong amid his initial appointment, as he previously taught classes on crypto and blockchain technology at MIT. But Gensler’s depth of knowledge in the crypto-space means he also knows of its potential pitfalls and is concerned about opening the floodgates for investors without proper guard-rails in place.

The SEC has recently issued warnings to investors about risks surrounding the cryptocurrency market. Those risks have been on full display in the past month, as bitcoin fell about 50% from its record high.

“[Gensler] wants to see regulation there, and if that happens, it seems like that would be what the SEC needs in order to approve a bitcoin ETF,” Craig Salm, vice-president of legal at Grayscale told the Financial Times. Grayscale operates the Grayscale Bitcoin Trust, which differs from an ETF and trades on the OTC markets.

But some remain optimistic on the chances of approval for a bitcoin ETF, including the CEO of VanEck, Jan van Eck.

“We have a ‘glass half-full’ view of the status of cryptocurrency regulations. Those who oppose a bitcoin ETF are effectively forcing investors into inferior fund structures and less regulated venues,” van Eck told the Financial Times.

Whether the upcoming bitcoin ETF applications are further delayed or approved, will likely be known within a few weeks. Until then, investors who want exposure to bitcoin will have to either buy it directly on a crypto-exchange platform like Coinbase, or settle for the bitcoin trust funds managed by Grayscale and Osprey.

Note: A previous version of this story was corrected to remove an incorrectly paraphrased statement from the CBOE’s Laura Morrison.