Bitcoin, Coinbase Are Soaring Despite Obstacles Facing Spot Bitcoin ETFs

livemint.com:

Bitcoin and crypto stock Coinbase Global have soared on hopes that an exchange-traded fund that holds the digital currency will soon be approved by U.S. regulators. Analysts say that outcome faces long odds.

Bitcoin has climbed about 20% since June 15, when BlackRockfiled paperwork with regulators to launch an ETF that would own bitcoin. Shares of Coinbase Global, which is listed as the custodian for the fund’s bitcoin holdings, leapt more than 40% over the same period. Approval of such a fund—known as a spot bitcoin ETF—by the Securities and Exchange Commission would mark a milestone for the industry and offer wider access to the cryptocurrency.

Investors would be able to buy and sell it through a brokerage account as easily as shares of stock. Fidelity Investments, Cathie Wood’s Ark Investment Management, Invesco, WisdomTree, Bitwise Asset Management and Valkyrie updated and reactivated their own applications following BlackRock’s move. Yet the SEC has repeatedly rejected spot bitcoin ETF applications going back to 2017 on the grounds that they are vulnerable to fraud and market manipulation.

At least half a dozen ETFs that own bitcoin futures are already on the market. In previous denials, the regulator argued that the filings didn’t specify an agreement to share “surveillance" between the stock exchange where the ETF would be listed and a spot bitcoin-trading platform that is “regulated" and “of significant size." The crypto platform is meant to share data for orders and trades as well as information about buyers and sellers, with the stock exchange to prevent potential market manipulation. Some industry watchers say the latest round of applications might not clear the bar either.