Welcome, and thank you for being part of the MyZucoins community! Let’s get into an interesting piece of crypto, finance, or tech news to stay ahead.
Big news for crypto in the US public markets over the last couple of days, so we’ll dig into many of the pieces below! Buckle in. 😋
Grayscale’s flagship Bitcoin fund, GBTC, with $16 billion in assets, is one step closer to converting to a spot Bitcoin Exchange-Traded Fund (ETF) after a U.S. Court of Appeals judge ordered a review of the Securities and Exchange Commission’s (SEC) denial of Grayscale’s application.
“Spot ETFs” are where you can buy Bitcoin directly through publicly traded markets.
Bitcoin’s already had a “futures ETF” offered by ProShares since 2021.
In the spot market, the transaction is settled “on the spot,” meaning almost immediately, in contrast to future markets where delivery and payment might take place at a later date.
This decision marks a significant shift for the crypto world as the SEC has been rejecting spot Bitcoin ETF applications for a decade due to concerns about market manipulation.
The court criticized the SEC for not having a clear reason to deny Grayscale’s application while approving two Bitcoin futures ETPs. “Without a clear explanation, this unequal regulatory treatment of similar products is illegal,” the court stated.
While this ruling doesn’t mean this particular application will become a Bitcoin ETF, it means there are no reasons why there can’t be one.
Grayscale celebrated this decision as a substantial leap forward for American investors and the Bitcoin ecosystem.
A spot Bitcoin ETF is seen as a potential gateway to widespread institutional adoption, letting investors gain Bitcoin exposure on a traditional stock exchange and hold the coin in a brokerage account.
Following the court’s decision, Bitcoin’s value increased 5% to $27,300 within an hour, and the overall crypto market also saw a boost, with Ethereum and XRP rising over 4%.
The SEC and Grayscale now have 45 days to appeal this decision.
The case may go to the U.S. Supreme Court or undergo a full-court review if appealed.
The United States Securities and Exchange Commission (SEC) is up against a series of deadlines.
Seven Bitcoin exchange-traded fund (ETF) applications are awaiting their verdicts, with Bitwise set to hear back on September 1st, and BlackRock, VanEck, Fidelity, Invesco, and Wisdomtree slated for September 2nd. Valkyrie’s result is due on the 4th.
These decisions come in the wake of a legal loss for the SEC against Grayscale Investments.
The U.S. Court of Appeals recently branded the SEC’s refusal of Grayscale’s Bitcoin ETF application as “arbitrary and capricious”.
However, according to Bloomberg ETF analyst James Seyffart, this does not necessarily mean automatic approval for Grayscale or others.
The SEC has the ability to delay its decisions, with final deadlines stretching to mid-March of next year.
As of now, the regulator’s next move remains uncertain. Seyffart suggests that the SEC’s options are limited to accepting defeat and approving Grayscale’s application, or revoking the listing of Bitcoin futures ETFs entirely.
However, fellow Bloomberg analyst Eric Balchunas deems the latter unlikely, given the SEC’s reported openness to Ethereum futures ETFs.
As the SEC faces its first deadline, the crypto world eagerly watches, hoping for a positive outcome from this series of deliberations. Read more here.
What’s The Difference Between A Bitcoin Spot ETF And Cryptocurrency Exchanges?
Both spot market ETFs and crypto exchanges deal with assets and their immediate prices.
They operate in different spheres and serve different purposes.
An ETF offers a way to gain exposure to the price movements of an underlying asset, while a crypto exchange provides a platform to buy or sell cryptocurrencies directly.
Here’s how they differ in a few ways:
- Spot Market ETF: An ETF (Exchange Traded Fund) is an investment vehicle that tracks an underlying asset or group of assets. A spot market ETF, though not a standard term, would likely refer to an ETF that tries to track the spot price of an underlying asset.
- Crypto Exchange: A platform where users can buy and sell cryptocurrencies. The term “spot” in crypto trading usually refers to the spot trading of cryptocurrencies, meaning trading them for immediate delivery.
- Spot Market ETF: To give investors exposure to the spot price of an underlying asset without actually owning the asset. This is especially useful for assets that are cumbersome or expensive to store, like gold or oil.
- Crypto Exchange: To facilitate the buying and selling of cryptocurrencies. It can offer spot trading, futures trading, and more.
- Spot Market ETF: When you invest in an ETF, you own shares of the ETF, not the underlying asset it tracks.
- Crypto Exchange: When you purchase a cryptocurrency on an exchange, you own the actual crypto tokens. You can transfer these tokens to your personal wallet or use them in transactions.
- Spot Market ETF: ETFs are typically regulated by financial regulatory bodies in the country where they are listed. For instance, in the US, they might be regulated by the Securities and Exchange Commission (SEC).
- Crypto Exchange: The regulation of crypto exchanges varies by country. Some countries have stringent regulations, while others have a more lax approach. Due to the decentralized nature of cryptocurrencies, regulating them has been a challenge for many governments.
- Spot Market ETF: The liquidity of an ETF depends on the volume of trading on the stock exchange where it’s listed.
- Crypto Exchange: Liquidity can vary significantly between different exchanges and between different cryptocurrency pairs on the same exchange.
- Spot Market ETF: Typically accessible through traditional brokerage accounts.
- Crypto Exchange: Usually requires setting up an account on the crypto exchange platform. Some platforms might have Know Your Customer (KYC) procedures to follow.
Turning Regulatory Hurdles Into Strategic Advantages
Regulation is a given in the crypto world, with Bitcoin ETFs’ experiences with the SEC serving as a lesson for next-generation cryptocurrencies like Zucoins.
In a crypto landscape that’s rapidly evolving amid regulatory scrutiny and legal tests such as these, staying ahead is vital for players like Zucoins.
Whether it’s finding new applications for Zucoin tokens or boosting the efficiency of the Splitchain network, the continual objective should be to redefine limits and establish new standards in the crypto space.
The potential inclusion of Bitcoin into mainstream on-the-spot traded markets is key for further market growth and adoption of cryptocurrencies by all kinds of groups, from consumers that invest their earnings through to international funds.
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All the best,
Peter & Rob