Valkyrie and BitWise Hop Back on the Bitcoin ETF Bandwagon

Valkyrie and BitWise have resubmitted applications for a Bitcoin spot exchange-traded fund (ETF) to the United States Securities and Exchange Commission (SEC). Despite the skepticism expressed by the SEC chief in the past, they have joined a growing list of applicants that includes Blackrock, Fidelity, Invesco, and Wisdom Tree.

This latest move by Valkyrie and BitWise, among the other applicants, demonstrates a market determination to gain regulatory approval despite the recent crackdown on the industry.

Valkyrie and BitWise Make Second Bitcoin ETF Attempts

On Wednesday, Valkyrie submitted an S-1 Form to the SEC. It designated the ticker symbol ‘BRRR’ for its proposed Bitcoin ETF to be listed on the Nasdaq.

Similarly, on June 16, NYSE Arca filed a proposed rule change with the SEC that would reportedly allow the listing and trading of shares from the Bitwise Bitcoin ETP Trust. These filings signal the companies’ renewed efforts to secure approval for their spot Bitcoin ETFs.

SEC’s Approval of Futures ETFs

While the SEC chief has doubts about approving a spot ETF, the regulatory body has already approved futures exchange-traded funds (ETFs). Valkyrie’s futures ETF application received approval from the SEC in May 2022, making it the second product to gain regulatory acceptance.

ProShares and VanEck were the first to launch Bitcoin futures ETFs. ProShares Bitcoin Strategy ETF (BITO) reportedly amassed over $800 million in assets. 

However, the SEC’s concerns about investor protection have hindered the approval of spot ETFs.

In December 2021, the SEC rejected the spot ETF applications from Valkyrie and Kryptoin following several delays throughout the year. Valkyrie’s Bitcoin Trust, proposed under the ticker BTCV, was initially filed with the SEC in January 2021. The rejection demonstrated the SEC’s cautious approach to spot ETFs and its emphasis on ensuring adequate investor protection.

Bitwise, an index fund manager, launched the BWEB ETF in October of the previous year. The fund aimed to invest in up to 40 companies operating in the rapidly evolving Web3 space. However, Bitwise has also faced similar delays. The cryptocurrency asset management and advisory firm filed its ETF application with the SEC in September 2021.

Unlikelihood of Positive News from the SEC

Given the SEC’s cautious approach, it is unlikely that the agency will make a positive decision on spot ETFs now. The SEC may need more time to develop a regulatory framework that adequately protects investors in the spot ETF space.

The uncertainty surrounding spot ETF approval led Grayscale to file a lawsuit against the Commission last year, accusing it of employing a flawed test and arbitrary rules when evaluating Bitcoin ETFs. In January 2023, the securities watchdog again disapproved the Ark-21 spot Bitcoin ETF listing.

Despite the skepticism regarding spot ETF approval, the market has experienced positive movement. Bitcoin’s value has increased by at least 4.5%. And other leading cryptocurrencies like Ethereum and BNB have also seen gains. This has resulted in a 4% cumulative market cap increase, according to CoinGecko data.

Vijay Ayyar, head of international markets at CoinDCX, said that the announcement of spot Bitcoin ETF applications from major institutions had reignited bullish sentiment in the crypto markets.