EXANTE Lead Analyst Viktor Argonov:
In October, the US Securities and Exchange Commission(SEC) legalized bitcoin futures funds BITO from Proshares and BTF from Valkyrie. However, the market continues to wait for spot ETFs. How realistic is their appearance?
Growing market appetites
Even before the launch of BITO, the chairman of the commission GaryGensler said he still doubts the permissibility of spot bitcoin ETFs (which track the current BTC rate), but similar funds tracking the price of a cryptocurrency-based futures could be considered.
This situation was not too pleasant for the Grayscale company, whichholds a giant GBTC spot fund worth more than $ 40 billion in the OTC market and would like to convert it to an ETF format. Now her fund was not only not the first on the American stock exchanges, but, possibly, inaccessible on them for a long time.
Shortly after the launch of the Proshares productit turned out that spot and futures sometimes provide significantly different profitability: due to high volatility after the first days of trading, GBTC turned out to be radically more profitable than BITO. On large horizons, the differences may be smaller, but the study became a hint from the SEC: there are few funds on the basis of derivatives on the public, many would prefer to invest at least in the over-the-counter market, at least in another country, but not in futures "surrogates".
Fight for justice
In November, the SEC took up the challenge and answered unequivocally,rejecting VanEck's spot ETF bid, albeit soon approving its own futures bidding under the ticker XBTF. It became clear that Grayscale's bid would not be allowed to pass either. But the company turned out to be more cunning. Lawyers scrutinized the 1940 law and found that the use of futures was not an excuse for the "manipulative and fraudulent" behavior of their underlying asset.
That is, both futures and spot bitcoin ETFsmust be treated equally. If the SEC still considers bitcoin to be a manipulative and, moreover, a fraudulent asset, then its futures cannot be called crystal clear either. For example, with a manipulative collapse of the BTC rate, the price of futures also falls.
The derivative mitigates volatility, but it was notthe main claim to the first cryptocurrency. Therefore, it was necessary either to legalize both ETF options, or not to allow neither. With these considerations, Grayscale went to court to defend VanEck's claim.
Prospects and risks
It is possible that the court will take the side of the company.Obviously, the SEC will not agree to a ban on ETFs already issued, but it may well recognize the legitimacy of the Grayscale analysis and even thank you for your help in a difficult matter at such an opportune moment. To the applause of crypto enthusiasts, the commission will authorize spot ETFs - first from VanEck, and soon from Grayscale.
On this wave, Bitcoin is likely to set a new record, and it is difficult to say what will happen next. Individual whales and influencers are capable of really unpredictable influence on its course.