Spot Bitcoin ETF Approval: A Game Changer for Crypto Market

The crypto community anticipates the approval of a spot Bitcoin ETF, signaling a significant shift in the market.
Jay Clayton, former SEC chair, believes it’s not a matter of ‘if’ but ‘when’ a spot Bitcoin ETF will be approved.

Excitement ripples through the crypto universe as major cryptocurrencies like Bitcoin, Ethereum, and XRP seem poised for a transformative phase. This optimism is buoyed by none other than Jay Clayton, the former chair of the U.S. Securities and Exchange Commission (SEC), who asserts that the approval of a spot Bitcoin exchange-traded fund (ETF) is not a question of ‘if’ but ‘when.’ The potential ramifications of such an ETF could propel the crypto market to an astounding $15 trillion, heralding a monumental shift in the world of assets.

In a recent CNBC interview, Clayton underlines that Bitcoin’s identity as a non-security is crystal clear. “Bitcoin is something both retail and institutional investors are eagerly eyeing, and some of our most reliable providers are intent on offering it,” Clayton stated. He highlights the unsustainable division between futures and cash products in the crypto landscape.

To provide context, the SEC granted approval for a Bitcoin futures ETF in 2021, resulting in the crypto market, encompassing Bitcoin, Ethereum, and XRP, surging to an astonishing valuation just above $3 trillion. However, the SEC has chosen to delay its verdict on numerous spot Bitcoin ETF applications from industry giants such as BlackRock, WisdomTree, and VanEck, pushing the decisions into mid-October or beyond.

The Catalyst: Grayscale’s Legal Victory

The mounting anticipation surrounding spot Bitcoin ETFs was significantly fueled by a legal triumph by crypto asset manager Grayscale against the SEC. This victory saw a court challenge some of the SEC’s reasons for rejecting spot Bitcoin ETF applications, labeling them as “arbitrary and capricious.” Following this ruling, Bloomberg Intelligence analysts increased the likelihood of spot Bitcoin ETF approval from 65% to a promising 75%.

Recently, Grayscale has urged the SEC to greenlight the conversion of its Bitcoin trust into a full-fledged spot Bitcoin ETF. Joseph Hall, a representative lawyer for Grayscale, echoes this sentiment, stating, “The Commission should now see the merit in approving this product,” and suggesting that the past approval of a futures Bitcoin ETF via the Chicago Mercantile Exchange should serve as a precedent.

Importantly, JPMorgan analysts have indicated that, post-Grayscale’s legal victory, the SEC may be compelled to approve pending spot Bitcoin ETF applications. Additionally, Bernstein analysts suggest that the green light for a Bitcoin ETF could pave the way for a swift approval of an Ethereum ETF, signaling the expansion of opportunities in the crypto ETF landscape.