The prospect of a physically-backed ETF or spot ETF got a boost with the launch of Hashdex Bitcoin Futures ETF (DEFI) on Thursday, media reports said. The basis for the optimism is that DEFI was filed under the Securities Act of 1933, unlike other futures-backed ETFs, which were under the Investors Act of 1940.
DEFI has been developed with Teucrium, which specializes in alternative investments.
Prospect of Bitcoin Spot ETF
As a physically-backed Bitcoin ETF would fall under the 1933 Act, the launch of DEFI is believed to pave the way for a BTC spot ETF someday soon. However, analysts believe the SEC may not allow a spot ETF until it gets the regulatory oversight of crypto exchanges, the coverage said.
All other futures-backed Bitcoin ETFs are filed under the Investment Company Act of 1940. Citing greater customer protection, SEC chair Gary Gensler preferred the 1940 Act for approving derivatives-backed ETFs.
“The SEC appears to be warming up to the possibility of approving a spot bitcoin ETF. Currently, only bitcoin futures ETFs are permitted in the U.S., but the commission is seeking feedback to determine whether funds like the ARK 21 Shares Bitcoin ETF should be allowed,” Cinthia Murphy, Research Director at @ETFThinkTank said in a tweet.
SEC Rejects Spot ETF Proposals
In June, the SEC denied Grayscale Investments’ bid to convert its Bitcoin trust into a spot ETF, provoking the digital asset manager to file a lawsuit against the Commission.
The SEC said the proposal did not meet the criteria set for preventing fraudulent and manipulative practices for spot ETF products. It cited that Grayscale’s proposed ETF will be vulnerable to wash trading, whale manipulation, network hacking, dissemination of misleading information, and manipulative activities through stablecoins.
In May, Ark Investment Management filed for a spot Bitcoin ETF the second time after its first proposal was declined by the ETF a month ago.
Similarly, global investment manager VanEck filed for a Bitcoin ETF for the second time in June after its first proposal was rejected in November 2021. The SEC extended a decision on VanEck’s proposal by two months in August after it didn’t receive any comment or feedback on the application when it called for it on July 13.
Spot Bitcoin ETFs Outside the US
Asset manager Monochrome in August received approval to launch a spot Bitcoin ETF in Australia. Monochrome Bitcoin ETF will give retail investors direct and insured exposure to the performance of Bitcoin, Ethereum, and other digital assets.
At least three other spot crypto ETFs are listed on the Australian markets – Cosmos Purpose Bitcoin Access ETF, ETFS 21Shares Bitcoin ETF, and ETFS 21Shares Ethereum ETF.
Jacobi Asset Management listed Europe’s first approved and regulated Bitcoin ETF (BCOIN) on Euronext Amsterdam in August.
Fidelity, one of the largest asset managers globally, launched a spot bitcoin ETF in Canada in December 2021.
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