Grayscale CEO suggested that the SEC is unlikely to approve ETFs for BTC futures, as such an exchange-traded fund would be expensive and economically ineffective.
Following a speech by US Securities and Exchange Commission (SEC) Chairman Gary Gensler at the Aspen Security Forum in August, it became clear that he has little enthusiasm for Bitcoin ETFs. He paid more attention to bitcoin futures contracts traded on stock exchanges.
Gensler’s remarks disappointed and puzzled industry participants, who have been waiting for the approval of an exchange-traded fund for bitcoin for several years. Bloomberg’s leading analysts have suggested that the SEC will soon approve the launch of an ETF on bitcoin derivatives, and the exchange-traded fund will be launched by the end of October.
“It’s like giving preference to one child over another,” said Grayscale CEO Michael Sonnenshein regarding the possible SEC approval of a Bitcoin ETF. His company first tried to register a Bitcoin ETF back in 2016.
Sonnenshine noted that the SEC has approved thousands of ETFs over the years that are not linked to the futures market. The agency’s initial objections to Bitcoin ETFs based on the risk of manipulating the BTC price can hardly be ruled out if the ETF is pegged to the futures market.
The SEC’s preference for an exchange-traded fund for BTC futures may be due to the fact that such a product would be subject to a 1940 law, which provides a broader range of investor protection than a similar 1933 law governing ETFs linked to the stock market.
Grayscale estimates that there is nothing in the 1933 law that would prevent the SEC from approving an application for a spot Bitcoin ETF, which would be required to comply with additional investor protections. These measures include requiring the company to have an independent board of directors, which Grayscale and any other stock market firm has.
Setting up a BTC futures-linked fund will be more expensive than setting up a regular Bitcoin ETF. In addition, BTC futures ETFs will cost more to consumers due to higher service fees. It also raises the question of how many retail investors would dare to enter the derivatives market to buy such an ETF.
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