Bitcoin ETF Approval Years Away, Says Failed ETF Applicant

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In Brief
  • William Cai does not expect a bitcoin ETF to be approved until 2022 or possibly even 2023.

  • The SEC declined the Wilshire Phoenix ETF application in Feb. 2020.

  • Currently there are at least ten bitcoin ETF applications sitting with the SEC.

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The SEC may not approve a Bitcoin exchange-traded fund (ETF) until 2022 or 2023, says Wilshire Phoenix co-founder William Cai.



Cai has first-hand experience in dealing with the SEC and its bitcoin ETF approval process. The SEC rejected Wilshire Phoenix’s bitcoin ETF application in February 2020. This gave the fund provider insight into why the agency is taking its time to approve a crypto ETF in the US.

“The major thing is manipulation, and they’re focused on the cash market, [which] is not regulated and does not trade on regulated exchanges,” Cai explained. Cash markets are those where commodities or securities purchased are paid for and received at the point of sale. Cai said the SEC is also concerned about the maturity of the relatively new asset class.



Gensler’s approach

Despite Wilshire’s Bitcoin ETF being prepared under former-SEC Chairman Jay Clayton’s tender, Cai is seeing the same remarks in bitcoin ETF extension letters under current SEC Chairman Gary Gensler. “I’ve seen nothing that suggests there’s been a switch in their thinking,” Cai said. 

The Wilshire Phoenix co-founder even went so far as to say that he felt more assured a Bitcoin ETF would not happen the more it became apparent Gensler would get the appointment. Cai had previous experience with Gensler as head of the CTFC when Cai was a trader at JPMorgan. “He came in, and he totally regulated, to the surprise of a lot of people,” Cai said. “He was a really strict, but fair regulator.”. Cai also highlighted that Gensler had higher priorities on his agenda than Bitcoin ETFs.

Applications pile up

Cai’s prediction comes as even more investment firms submit their own applications for a Bitcoin ETF. At least 12 issuers including Fidelity Investments, Grayscale Investments and WisdomTree Investments have submitted filings for a Bitcoin ETF.  Cathie Wood’s Ark Invest is the latest fund provider to submit its own application. “We think they’re all going to get stuck,” Cai said.

Craig Sal, vice-president of legal at Grayscale, believes Gensler is taking a strategic approach when it comes to the applications. He believes Gensler is approaching the approval process as a means of gaining more oversight over crypto exchanges. “Gensler wants to see regulation there, and if that happens, it seems like that would be what the SEC needs in order to approve a bitcoin ETF,” he said. 


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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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