Little evidence that a spot bitcoin ETF would expand the market

financialpost.com:

You don’t have to want to invest in bitcoin to be in favour of United States regulators giving their approval to a bitcoin exchange-traded fund. You can disapprove of other people putting their money into the cryptocurrency, but defend the idea that the U.S. Securities and Exchange Commission (SEC) should let them. Perhaps not to the death — we don’t need to go all Voltaire about this — but you get the idea.

Applications for a spot bitcoin ETF — a fund that would actually hold bitcoin directly as opposed to investing in derivatives tied to the bitcoin price — have been consistently rejected by the SEC over the past decade.

But a court ruling this week looks to have changed the picture. A judge ruled that the regulator acted capriciously in denying the Grayscale Investments LLC‘s request to convert its Bitcoin Trust to an ETF, given futures-based bitcoin funds are already available.

The ruling added to excitement about spot bitcoin ETFs that has been building since June when BlackRock Inc., the world’s largest fund manager, put in its own application to launch one. Surely, cryptocurrency enthusiasts reasoned, well-connected BlackRock would not be making such a request unless it knew the regulator was thawing its position?

There were specific reasons to think BlackRock would be able to break the logjam. Its application included a plan for a “surveillance-sharing” arrangement with a cryptocurrency exchange, to deal with the SEC’s concern that nefarious traders could manipulate the market to the disadvantage of the ETF’s investors. Other asset managers, including Cathie Wood’s Ark Investment Management LLC, have amended their pending bitcoin ETF applications to copy the BlackRock plan.

Bitcoin’s price shot up 20 per cent in