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Fineqia market note summarises current SEC position on bitcoin spot ETFs

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Matteo Greco, Research Analyst at digital asset and fintech investment business Fineqia International, writes that last week saw bitcoin (BTC) close at around USD26,000, a 0.5 per cent decrease in price from its previous week’s closing price of USD26,100. 

“Last week was pretty hectic, following the lawsuit win for Grayscale against the SEC. The court said that the SEC’s decision to reject the Grayscale Bitcoin ETF application was arbitrary and capricious and did not offer adequate explanations for the rejection.

The SEC will now evaluate the Grayscale Bitcoin ETF application again and give a new verdict in due course,” Greco writes. 

“Following the court decision, the market rebounded strongly with BTC reaching over USD28,000 before being pushed back to the USD26,000 price level, which mirrors the trading price prior to the lawsuit announcement. The Grayscale win created some expected short-term volatility, but the decision about if Grayscale or any other digital asset manager, will be able to list a Bitcoin Spot ETF has yet to be made. 

“This Grayscale victory caused a narrowing in the Grayscale Bitcoin Trust (GBTC), which reached 16 per cent before stabilising around 20 per cent. It is the lowest discount recorded since the beginning of 2022. The narrowing in discount confirms the increased confidence of investors concerning the possibility for a future conversion of the trust in an ETF.”

Greco writes that the SEC announced the delay concerning their decision for Bitcoin Spot ETFs rejection or approval. Between the 1st and the 4th of September, the filings presented by Bitwise, VanEck, iShares, WisdomTree, Invesco, Wise and Valkyrie met their first deadline. 

“The second deadline is now scheduled between the 16th and the 19th of October. It must be remembered that for every filing there are four deadlines. The SEC is allowed, and expected, to delay their decision three times. The last deadline for all these applications is mid-March 2024.

“The SEC decision did not cause any strong movement in the market as this announcement was widely expected from all the investors and already priced in. Investors expect the SEC to delay their decision as long as possible and most likely the final outcome will be pushed back to the fourth and last deadline.”

Greco writes that in contrast to the US, where the fight between service providers and the regulator has been going on in the last few months, Asia keeps pushing to create a friendly environment for digital asset businesses. Several countries in the Asian continent already confirmed in the past few months a strong willing to become a digital assets hub and the actions taken confirm this desire, he says. 

Binance, the largest digital asset worldwide exchange, launched its Japan subsidiary at the beginning of August. The exchange currently allows Japanese customers to trade 34 digital assets, but it is planning to increase the number of listed assets up to 100.

SEBA Bank, a Switzerland-based cryptocurrency bank, announced last week the reception of an approval-in-principle from Hong Kong’s securities regulator. SEBA Bank becomes the fourth entity to receive from the Hong Kong regulator.

“Asia and Europe are trying to take a bigger slice of the digital asset market, thanks to the increased uncertainty in the US caused by the recent tensions between service providers and the regulator. The situation is favouring the flee of capital from the US to other jurisdictions, as we await a final and clear decision concerning ETFs listing and exchanges lawsuit,” Greco writes.

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