The United States Securities and Exchange Commission (SEC) has postponed its decisions on several spot bitcoin exchange-traded fund (ETF) applications in anticipation of a potential government shutdown. Many experts had anticipated these delays, given the circumstances.
SEC’s Decision Delays
The SEC has decided to delay the rulings on several spot bitcoin ETF proposals. This decision follows the recent delay in decisions regarding Ark 21 Shares and GlobalX applications, which were pushed back to January. Now, according to court filings on September 28, the SEC has postponed spot bitcoin ETF applications from BlackRock, Invesco, Bitwise, and Valkyrie.
James Seyffart, a Bloomberg ETF analyst, also anticipates that the SEC will likely extend the review period for applications from VanEck, Fidelity, and WisdomTree.
Reasons Behind the Delays
These delays are occurring early to mitigate the potential impact of an impending government shutdown. During a hearing in Washington, SEC Chair Gary Gensler expressed concerns that a government shutdown would leave the regulatory body operating with a skeleton staff.
Applicants Remain Hopeful
Among the applicants, BlackRock’s proposal is highly anticipated, given the firm’s impressive track record of garnering approvals from the SEC. Seyffart highlights that BlackRock has secured approvals from the SEC in 575 out of 576 cases.
Before these delays, the applicants faced deadlines in October. However, the SEC has the authority to extend its review period until the end of the initial 240-day deadline. These delays have also raised questions about whether the SEC plans to appeal the recent Grayscale court decision. In that ruling, the court sided with Grayscale and instructed the SEC to re-evaluate Grayscale’s application to convert the Grayscale Bitcoin Trust (GBTC) into an ETF.
Government Shutdown Looms
These SEC delays coincide with the looming possibility of a government shutdown in the United States, set to begin on October 1st. A government shutdown could disrupt the operations of federal agencies, including financial regulators. The shutdown threat arises from the failure of both houses of Congress (the House and the Senate) to reach an agreement on funding bills for government operations.
Congress must pass 12 separate full-year funding bills by October 1st to prevent a complete shutdown. The SEC had previously delayed spot Bitcoin ETF applications in August, and the next set of deadlines for applicants falls in mid-January. Observers in the industry are anticipating yet another delay announcement by the SEC at that time.
However, it’s crucial to note that the SEC will have to make a final decision by March at the latest. In August, Bloomberg ETF analyst Eric Balchunas raised the probability of a spot bitcoin ETF approval to 75%, up from an earlier estimate of 65%. Balchunas attributed the increased likelihood to the decisive US Court of Appeals Circuit ruling in the Grayscale vs. SEC case.
Disclaimer: This article is provided for informational purposes only and should not be considered legal, tax, investment, financial, or other advice.
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