According to analysts at AllianceBernstein, the chances of the SEC eventually approving one of the Bitcoin spot ETFs are relatively high.
AllianceBernstein, one of Wall Street's most well-known research and sales brokerage firms, believes that the U.S. Securities and Exchange Commission cannot continue to maintain its stance against the creation of a Bitcoin spot ETF for much longer.
First, analysts at the US firm point out that the SEC has set a favorable precedent for the approval of one of these listed investment products, by giving the green light to several Bitcoin futures ETFs, such as ProShares, in 2021.
The US securities regulator also gave its approval last month to the first leveraged Bitcoin futures ETF, the x2 Bitcoin Strategy ETF from Volatility Shares, which is listed on the New York Stock Exchange. Based on this, AllianceBernstein analysts believe it is quite likely that the SEC will eventually abandon its current position of rejecting a Bitcoin spot ETF and end up approving it.
On the other hand, according to AllianceBernstein analysts, the lawsuit that Grayscale Investments has filed against the SEC, for rejecting its Bitcoin spot ETF application, it may also have a favorable impact for those looking to launch one of these products. In the middle of last year, the Digital Currency Group subsidiary filed a lawsuit against financial regulator after it rejected its application to convert its iconic Grayscale Bitcoin Trust product into a spot Bitcoin ETF.
Over the past decade, the SEC has refused to approve a Bitcoin spot ETF citing concerns about a lack of regulation and the possibility of market manipulation. However, according to AllianceBernstein, courts may find it illogical that the SEC has given its approval for the launch of several Bitcoin futures ETFs in the United States but refused to create a Bitcoin spot ETF, considering that the price of BTC futures is derived from the spot price.
Finally, the firm's analysts highlighted BlackRock's track record with the SECLarry Fink’s asset manager, with $10 trillion under management, has managed to secure regulatory approval for all of the products it has filed so far. In addition to this, BlackRock’s application for a Bitcoin spot ETF includes a strategy to mitigate the risk of market manipulation related to the cryptocurrency.
As reported by this outlet, sources close to the SEC said the regulator was rejecting ETF proposals it had received recently, including BlackRock's, because they lacked clear details and did not provide sufficient information.
However, it has emerged that BlackRock has updated its documents and has resubmitted its Bitcoin spot ETF registration application to the SEC. This time, BlackRock's filing includes Coinbase as a partner in the shared surveillance agreement. Other financial giants such as Fidelity Investments have also teamed up with the US exchange to comply with the SEC's demands.
AllianceBernstein changed its mind about Bitcoin in 2020, going from dismissing the cryptocurrency as an investment asset in 2018 to recommending it to its investors as an alternative to hold for the long term. At the time, Bernstein Research strategy team co-head Inigo Fraser-Jenkins said that Bitcoin had become an attractive asset for the reserve of value.
The firm is also supportive of blockchain technology, integrating it into its operational processes to increase efficiency, agility and accuracy. Ronit Walny, head of AllianceBernstein's investment innovation center, said: said last year that Blockchain technology will be transformative for the asset management industry.
Continue reading: SEC calls for greater clarity from managers seeking approval of a Bitcoin spot ETF
